The U.S. signed with the East African Community Feb. 25 a cooperation agreement that the Office of the U.S. Trade Representative said “will increase trade-related capacity in the region and deepen the economic ties between the United States and the EAC.” The U.S. also announced that it will begin looking to expand its Trade Africa initiative beyond the EAC, which comprises Burundi, Kenya, Rwanda, Tanzania and Uganda, and is considering changes to the African Growth and Opportunity Act. Some sources speculated that these steps are designed to prepare the way for a potential free trade agreement between the U.S. and the EAC.
According to a USTR fact sheet, the cooperation agreement commits both the EAC and the U.S. to three objectives.
Trade Facilitation. The two sides will increase cooperation on customs issues, including implementation of the World Trade Organization’s Trade Facilitation Agreement. This will build on the EAC’s own work on customs reforms, which have resulted in substantial reductions in the time and cost of moving goods across borders within the EAC. For instance, container transit times from Mombasa, Kenya, to Kigali, Rwanda have declined from 21 days several years ago to six days, while associated transport costs are down by more than $1,700 per container.
Food Safety and Plant and Animal Health. The agreement will help the EAC meet international standards by bringing U.S. technological expertise to bear and fully implement the WTO Agreement on Sanitary and Phytosanitary Measures, which will help EAC members increase food security and create additional export opportunities for agricultural products produced in the region.
Global Standards. The agreement provides a framework for improving technical regulations, standards, testing and certification; e.g., by helping to train East African standards officials and developing electronic systems for engaging the public and interested stakeholders on proposed technical regulations. This will help increase EAC members’ ability to meet international quality and safety standards by improving full implementation of the WTO Agreement on Technical Barriers to Trade.
Announced in July 2013, Trade Africa is a partnership between the U.S. and sub-Saharan Africa that seeks to increase trade within Africa as well as expand trade and economic ties between Africa, the U.S. and other global markets. This initiative has focused to date on the EAC, which has established a free trade area and a customs union and is working toward a common market. However, USTR Mike Froman said, the U.S. is now looking to expand Trade Africa to other African partners, building on AGOA in the short term while “establishing new building blocks for a more mature and comprehensive 21st century U.S.-Africa trade and investment relationship over the medium to long term.”
USTR states that Trade Africa has contributed to a number of successes, including improvements at the ports of Mombasa and Dar es Salaam, construction of one-stop border posts in East Africa, and more effectively linking the U.S. and EAC private sectors under the U.S.-EAC Commercial Dialogue, which recently held its inaugural meeting. The U.S. has also established a trade and investment hub in East Africa focused on (1) increasing exports under AGOA to the U.S. as well as exports to regional partners and the rest of the world, (2) facilitating investment and access to the newest technologies and expertise for priority development sectors, (3) expanding and diversifying regional agricultural trade and food security, and (4) supporting the implementation of regional integration policies adopted by the EAC. USTR notes that trade in goods between the U.S. and EAC members grew 52 percent in the last year and 103 percent in the last five.
In announcing the cooperation agreement with the EAC, Froman added that the Obama administration is consulting with Congress about making AGOA more effective, such as through possible improved rules of origin and revised review processes. Froman said that while AGOA (and its third-country fabric provisions) should be extended for as long as possible, the U.S. also should begin a dialogue about moving toward more reciprocal trade relations over time.
In the meantime, the U.S. is launching a new effort with the EAC to develop a regional AGOA strategy. Froman said this effort will bring together U.S. government agencies, other donors, the U.S. and East African private sectors, and EAC governments “to support greater utilization by the EAC countries of the market access they already enjoy under AGOA.”