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Increasing Trade Within and With Africa is Goal of New U.S. Program

Wednesday, July 03, 2013
Sandler, Travis & Rosenberg Trade Report

President Obama announced July 1 the launch of Trade Africa, a new partnership between the U.S. and sub-Saharan Africa that seeks to increase internal and regional trade within Africa as well as expand trade and economic ties between Africa, the U.S. and other global markets.

Trade Africa will initially focus on the member states of the East African Community (Burundi, Kenya, Rwanda, Tanzania and Uganda), which a White House fact sheet states “have increasingly stable and pro-business regulations” and “are home to promising local enterprises that are forming creative partnerships with multinational companies.” The fact sheet notes that intra-EAC trade has doubled in the past five years and that the region’s GDP has quadrupled over the past decade to more than $80 billion. Trade Africa will aim to build on that progress by doubling intra-regional trade, increasing EAC exports to the U.S. by 40%, reducing by 15% the average time needed to import or export a container from the ports of Mombasa or Dar es Salaam to Burundi and Rwanda in the EAC’s interior, and decreasing by 30% the average time a truck takes to transit selected borders.

The U.S. is already working to increase trade and investment with the EAC through the U.S.-EAC Trade and Investment Partnership announced in June 2012. Activities underway as part of this initiative include exploring the possibility of a U.S.-EAC investment treaty, negotiations on a trade facilitation agreement and expanding the TIP to include regulatory issues (e.g., product standards and regulatory systems related to food safety and plant and animal health), and transforming the U.S.–Africa Trade Hubs into U.S. Trade and Investment Centers to provide information, advisory services, and risk mitigation and financing.

In addition, the fact sheet states, the supporting the EAC’s efforts to advance regional integration through bilateral and regional trade facilitation and a new partnership with TradeMark East Africa. Here there is a specific focus on reducing barriers at borders, including by moving to single border crossings and implementing customs modernization programs using technologies that allow customs services to communicate with each other; supporting the transition to a single EAC customs and revenue sharing authority; and addressing barriers to transit, including by reducing the number of roadblocks and the amount of time spent and fees paid to move products from the ports to neighboring borders.

Finally, the U.S. intends to form public-private partnerships with East African and U.S. industries and trade associations to stimulate greater trade in goods under the African Growth and Opportunity Act. Efforts will focus on building the capacity of private-sector associations in Africa to provide sustainable business services and promote investment in key growth sectors in Africa, including agriculture, health, clean energy, environment and trade-related infrastructure; formalizing partnerships between U.S. and African associations to increase trade through collaboration on trade shows and business-to-business matchmaking; and working with governments and national export associations to develop export strategies and establish export resource centers across the EAC to provide sustainable services for firms looking to export under AGOA.

U.S. Trade Representative Michael Froman said that while the EAC will be the initial focus of the Trade Africa strategy the U.S. “will also seek to work with other regional economic communities in Africa, and ultimately to support their efforts to create a continent-wide, integrated market.” President Obama noted, for example, that he has directed Froman to finalize a new trade and investment agreement with the Economic Community of West African States.  The president also expressed his interest in not only renewing but improving AGOA, which is currently scheduled to expire in 2015.

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