USTR - U.S. Sub-Saharan Africa Trade and Economic Cooperation Forum
Office of the United States Trade Representative

 

U.S. Sub-Saharan Africa Trade and Economic Cooperation Forum
12/08/2003

Private Sector Session
J.W. Marriott Hotel

Remarks by Robert B. Zoellick, U.S. Trade Representative

Well, I want to thank Mr. Tempelsman for that very kind and thoughtful introduction. For those
fellow Trade Ministers in the room, I thought when he was opening, and he mentioned how trade affected so many interests across our societies, that we could say, "Yes, and they have the phone number of every Trade Minister and they let us know about all their interests too."

I want to thank CCA for organizing this very important private sector component of this year’s AGOA Forum and for inviting me to be here with you. And I’m especially pleased to be here with my friend, Minister Kituyi of Kenya.

I’m exceptionally pleased that I’ve been able to participate in all three AGOA Forums held to date, including the one last year that was very ably hosted by our friends from Mauritius. I have found these events to be extraordinarily useful in terms of taking stock about we have accomplished, but also in trying to get a sense of what we should be focusing on in the way forward.

And of course, the discussions and exploration of business opportunities taking place at this private sector session are certainly as if not more important than the government-to-government meetings that will take place. Because our efforts on the policy side will ultimately only bear fruit if we are able to shape an environment in which you - the businesspeople, entrepreneurs, and investors - can be successful in your work.

As I seek to learn more about sub-Saharan Africa in late 2003, I reflect on the fact that roughly three-and-a-half years have past since the passage of AGOA. And I have to say, I see many countries – more than ever before – that want to move beyond aid-dependency to try to use trade to develop their economic growth and development and pattern of opportunity. And as Mr. Tempelsman said, the question is how to integrate trade and aid effectively.

The leaders of these countries – including such trailblazers such as President Museveni of Uganda and President Mogae of Botswana, both of whom I had the pleasure to meet recently here in Washington, understand that sub-Saharan Africa has fallen behind much of the rest of the world economically over past decades and that to catch up, African countries need to figure out how to participate more fully in the global economy.

Now many of these countries – and there is perhaps no better recent example than Kenya under President Kibaki – have undertaken difficult economic and political reforms designed to create an atmosphere in which private sector-led growth can flourish. And this is the context in which the Bush Administration has approached U.S. trade policy toward Africa.

2

We certainly share the view that fuller integration of sub-Saharan African countries into the

world economy is crucial for long-term economic growth and development.

We believe that greater involvement of African countries in the multilateral trading system is in

the America’s interests as well. Africans clearly have not shared fully in the benefits of global

trade liberalization over the past few decades.

We have other interests at stake, too, in Africa’s economic success, including countering poverty,

spreading free market values and good governance, assisting in the development of the rule of

law, creating a sound economic base for democracy, and the opening of relatively untapped

markets for American businesses.

It seems to me that there are four key challenges African countries face as they seek to become

more competitive internationally: establishing rule of law and property rights, a climate for

investment, developing of infrastructure, and the all-important human capacity.

Now first, in recent years, African countries have taken great strides to strengthen the rule of law

and to improve governance. As Mr. Tempelsman mentioned, the NEPAD Action Plan

recognizes however, that much still needs to be done to try to build effective governing

institutions free of corruption and supportive of open markets.

As the Peruvian economist Hernando de Soto has described, property rights are also a key factor

in economic growth because they provide the opportunity for people, especially poor people,

poor farmers – to be able to keep and build on the rewards that they create. And this is certainly

true in Africa as well.

Second, investment: Sub-Saharan Africa represents nearly one-eighth of the world’s population.

Yet the region receives less than one percent of global foreign direct investment. Nor are local

savings developed property to try to help Africa grow.

If African countries are to increase production and create jobs for their people, they must make

local investment safer and attract greater foreign investment, especially in areas where they can

add value to products, such as light manufacturing and agricultural processing.

Many African countries are also challenged by aging or inadequate infrastructure, particularly in

the transport, energy, and telecommunications sectors. High transport costs, unreliable utilities,

poor communications systems, these become very serious barriers to development and

investment in creating opportunity for businesses.

Now part of the answer here is to open up the trade in the services industry, which both increases

efficiencies and promotes investment. The World Bank found that economic growth in countries

with open financial services markets exceeded the growth of economies with closed financial

services markets by a full percentage point. The figure increased to 1.5 percent for countries that

also have open telecommunications markets.

3

Now the fourth challenge is that of human and institutional capacity. To participate effectively in

international trade and the multilateral trading system, African countries need help in terms of

educating and training people to participate in new businesses and to negotiate business deals and

take part in trade agreements. Also Africa needs stronger institutions to help develop trade.

So here’s what we are trying to do to address these challenges: First and foremost, there is

AGOA, what brings us all together here. AGOA provides eligible African countries with the

most generous access to the U.S. market of any country or region of the world other than those

with which the U.S. has free trade agreements. Under AGOA, almost all products from eligible

African countries enter the U.S. duty-free, including apparel.

By any measure, AGOA has been an outstanding success. U.S. imports under AGOA –

everything from automobiles to apparel to fresh-cut roses – have risen substantially, bringing tens

of thousands of new jobs and hundreds of millions of dollars in new investment to sub-Saharan

Africa. But in addition to investment and jobs, AGOA has also provided important incentives for

African countries to improve their infrastructure, especially via privatization. Since AGOA was

passed several countries have initiated, accelerated, or completed the privatization of key

infrastructure sectors such as telecommunications.

And U.S. firms have benefitted from AGOA, mainly from the improved trading and investment

opportunities that AGOA has fostered, but also through sales of machinery and components for

African-produced AGOA goods. U.S. exports to sub-Saharan African countries were up 9

percent in the first nine months of 2003.

Now a second element of our Africa policy is the negotiation of a free trade agreement with the

five countries of SACU, the Southern African Customs Union. This is our first free trade

agreement with sub-Saharan Africa, and it’s part of our larger effort to reach out to trade partners

from all regions of the world, and to expand opportunities for U.S. businesses while broadening

integration with the global economy.

The US-SACU FTA is to build on AGOA’s success while at the same time moving from oneway

preferences to a two-way partnership. We hope that this FTA can serve as an engine for

wider regional growth and as a model for future FTAs between the United States and African

countries.

We also believe this free trade agreement, as in other FTAs, will significantly boost investor

interest in the region, particularly in the manufacturing and in the services industries. It could

also help to improve infrastructure, particularly if the SACU countries take an ambitious

approach to the area of services liberalization. Both donors and private sector investors look to

the openness of sectors such as telecom, transportation and power generation when considering

investment in these infrastructure-related areas.

4

Our FTA negotiations began earlier this year, and we aim to complete them by the end of next

year. So this could become a very important model, to send a signal to countries all throughout

Sub-Saharan Africa of what’s possible.

The third element of our Africa trade policy is engagement with African countries in the WTO.

The successful conclusion of the Doha Development negotiations would have a significant

positive impact on both investment and infrastructure in Africa – but only if African countries

help to craft practical solutions to the differences that are preventing progress on the Doha

Agenda.

We worked closely with all of you, with African countries to launch the Doha Round and we

consulted very closely in the run-up to the Cancun Ministerial on all major issues as part of the

WTO negotiations.

We also worked together to craft a solution to the very difficult TRIPS and public health issue.

Thereby broadening African access to critical medicines for HIV/AIDS and other diseases

throughout Africa and throughout the world. We backed up this policy with $15 billion

presidential initiative on HIV/AIDS, trying to bring real resources to this effort.

So frankly, we were a little disappointed by the rhetoric and breakdown at the Cancun meeting,

as I know many of you were as well. Multilateral trade talks through the WTO are the best

mechanism for African countries to achieve some of their most important objectives, such as the

global reduction of trade-distorting agricultural subsidies or increased market access.

Some of the greatest market access opportunities for African countries are not in the developed

world but with other developing countries. Thanks to preferential programs like AGOA, or the

Generalized System of Preferences, and similar programs operated by other developed countries,

most African goods already enter the U.S. market duty-free, about 92, 93 percent. The real

opportunities for sub-Saharan African countries in the future lie in some of the large market

developing countries such as Brazil and India, where tariffs remain very, very high.

Given this dynamic, we were puzzled that African countries did not urge mid-level developing

countries to open their agricultural markets, too. Many of these mid-level developing countries

offer African countries the most to gain in terms of market access, because their barriers are high,

their populations are large, and their growth prospects offer opportunities to all.

And one of the items that I hope to talk about with my Trade Minister colleagues over the course

of the next couple of days is to be aware that there has been a recent development on the WTO

front that should be of particular interest to Africa and the United States and some others.

There’s a case that was filed by India, and won, against the EU, about the EU preference

program, because it violated the most-favored nation. I think this is an extremely unfortunate

precedent, and we ought to think closely about what it could do to AGOA. So, this is a classic

example of how some developed nations, the United States, the EU, African countries have some

5

common interests. Because if this precedent takes hold, it could put AGOA at risk. And it’s not

us whose doing it, it’s a fellow developing country.

In view of the challenges that African countries face on the infrastructure for trade, we were also

surprised that there was not more African support for WTO negotiations on trade facilitation.

The goal of trade facilitation in negotiations is really just to simplify and regularize customs

procedures internationally and help get goods to market more quickly and less expensively. From

my visits to Sub-Saharan Africa, this would appear to be a priority for many African countries,

certainly for the land-locked, but I have story after story from many of you about the problems of

bringing goods in through the systems. And especially in an environment where you will

competing with other developing countries around the world in bringing goods to market

quicker.

Another of the so-called "Singapore issues" was transparency in government procurement.

Which is also crucial to African interests because agreed international disciplines in this areas

would help lower costs and, very important, fight corruption. Again, this is not opening the

government procurement market, it’s simply transparency so that you know what the rules are.

A topic that received a lot of attention in and after Cancun is cotton. And we certainly know that

this is a sensitive issue for many African countries. But there is also a lot of misinformation

going around about this issue. So let me make sure our position clear: we have been and remain

willing to deal with cotton in the context of the WTO’s agricultural negotiations. We have stated

clearly our interest in eliminating export subsidies worldwide for all agricultural commodities,

obviously including cotton, reducing trade-distorting domestic support substantially, and scaling

back tariffs on farm products across the board.

We even committed to cut domestic cotton subsidies as part of an overall package that would

also have reduced European and Chinese subsidies (the Chinese, I think are now the second

largest, they’re not too far behind us) along with all agricultural subsidies. What we cannot do is

to separate out cotton or any other commodity for handling outside of the agricultural

negotiations or to discuss domestic support without also addressing tariffs.

A reduction in cotton tariffs - which run at 100 percent or higher in major consuming countries

like India or Pakistan - would help to increase demand, which in turn would help to boost the

prospects cotton producers, including in West Africa. There are many farm goods that suffer

from trade-distorting domestic policies. We want to address all of these policies in all sectors,

including cotton, in the context of a global agreement on agricultural trade reform.

We worked closely with African countries to launch the Doha Round and we want to continue to

work with all of you to put these negotiations back on track. We continue to believe that we share

many common interests in those negotiations and we are open to your practical ideas. Because

we believe that African countries and other WTO members have very important ideas about how

6

to move these negotiations forward, so we hope to have some further discussion on that this

week as well.

A fourth element of our policy is trade capacity building. We know that market access alone is

not enough for many African countries, especially those with little history or experience in

producing value-added goods. So we sought to try make available the tools and training these

countries need to maximize their opportunities under AGOA and to participate more fully in the

multilateral trading system. In the last three years, the United States has invested some $345

million in trade capacity building programs for sub-Saharan Africa, including $133 million this

year, a 26 percent increase over the prior fiscal year.

Now the technical assistance has gone toward such programs as helping African businesses and

farmers to identify market niches, to address quality and standards issues, to gain access to more

timely market information, and to help establish linkages with prospective American business

partners.

Trade capacity building is a crucial element of our approach to AGOA, the SACU FTA, and our

engagement with African countries in the WTO. In the case of AGOA, my office, the Trade

Representative’s office has worked with several other U.S. agencies to try to help African

governments and businesspeople to access trade benefits under AGOA. We have held national

and regional seminars on AGOA throughout the continent. Last year USAID established three

regional trade competitiveness hubs in sub-Saharan Africa to provide expertise on the full range

of trade issues - from AGOA issues to sanitary and phytosanitary topics to WTO topics. And that

is an idea that came out of one of our AGOA forums.

In the SACU negotiations, we have established a special trade capacity building cooperative

group that will help identify and respond to technical assistance needs in the course of the

negotiations, in the future implementation of the free trade agreement, and in the further

transition to free trade. And in the WTO, we have provided funding for trade capacity building

for African Members both through the WTO’s Global Trust Fund and via Africa-specific

programs funded by USAID.

Now the private sector also has a very important role to play in the area of trade capacity

building. We have included private sector and NGO representatives in our trade capacity

programs for AGOA and recently published a Federal Register notice soliciting private sector

input and participation in trade capacity programs as part of our SACU FTA.

We are also trying to explore a novel application in that FTA, in ways in which the SACU

countries and the United States can use the process of this free trade agreement to try to promote

greater public/private sector cooperation, and greater use of industry "best practices" in dealing

with HIV/AIDS testing and treatment of employees.

7

Just to give you one example, when I was in South Africa, I announced a program that was

supported by OPIC, our Overseas Private Investment Corporation, that was trying to help deal

with housing financing in South Africa. It had a very important concept. In many parts of the

world, people are afraid to be tested for HIV/AIDS because they’re afraid that it will hurt their

credit rating. This program turned that concept on its head. To be able to get the credit, to buy a

small home you had to be tested, and then you had, if you were found positive, to be given

treatment. So it took the testing and the treatment and linked it to a benefit in terms of being able

to own your own home.

As we look to the future of U.S.-Africa trade and economic cooperation, we will continue to try

to examine ways in which we can support your efforts to strengthen the rule of law and property

rights, increase investment, improve infrastructure and to address capacity constraints.

In the near-term, our trade cooperation with African countries in the WTO will be important.

Because the Doha Development Agenda represents a once-in-a-generation opportunity to free up

world trade, while at the same time addressing some of the special needs of the developing

world.

If African countries want to transform their economies, attract investment, modernize their

infrastructure and become full players in the global economy, all of you will need to consider

your interests in a successful outcome at the Doha Round.

Over the medium- to long-term, we certainly remain open to considering new prospective FTA

partners in sub-Saharan Africa. We are particularly interested in exploring ways in which, as with

SACU, an FTA can help to strengthen regional integration on the continent.

AGOA will continue to be at the center of our approach. We recognize that there is a lot we can

do to try to improve on AGOA and its implementation and have been working with Congress, the

private sector, NGOs, and our African trade partners on some elements for a possible AGOA 3

legislation.

As many of you are undoubtedly aware, there were some AGOA 3 bills introduced in Congress a

few weeks ago. And over the next couple of months, I’m going to be personally consulting

closely with Chairman Thomas of the Ways and Means Committee, Chairman Grassley of the

Finance Committee, as well as with the sponsors of these AGOA 3 bills, and with Members and

staff of the key Committees as they consider and move them forward.

Our vision for AGOA 3 is to amend the Act in a way that would give greater confidence to

investors as well as producers and buyers of African products. Now of course, one way to do this

is to fulfill President Bush’s commitment at the last AGOA forum, to work with Congress to

seek the extension of AGOA beyond its 2008 termination.

8

Another way, I know its very important to many of you, is to find an appropriate means to

address as soon as possible the expiration next year of AGOA’s third-country fabric provision.

We certainly recognize that African textile producers are not yet in a position to supply the needs

of the AGOA apparel industry in Africa, but at the same time we want to try to provide

incentives for investment in African textile production. Because, in the long-term, and in view of

coming changes in the world textile and apparel trade, African producers will have to consider

ways in which they can become more competitive. And from my discussions with people in the

industry, the key way to do that is with vertical integration of the industry from cotton to textile

to apparel.

I think it will also be important – in AGOA 3 or by other means – to help African countries to

address supply-side constraints in developing export industries. AGOA opened the U.S. market

to African goods but many African countries simply do not have the capacity yet to produce the

manufactured or processed goods for the U.S. market. We need to find ways to help get such

industries jump-started, especially in least developed countries.

Finally, I hope that AGOA 3 can strengthen our ability to deliver technical assistance to countries

and individuals who are eager to make the most of AGOA’s trade benefits.

Africa faces many challenges. We certainly know these challenges are not easy. And I want to let

all of you know how much we respect your efforts in the public and the private sector, to make

progress. It will certainly take time, it will take energy, and it will take resources to address these

challenges and to help people realize the trade, economic, and human potential. But I have to say,

that I have been extraordinarily impressed by the advances that African governments and

businesses have been able to make in recent years.

As I’ve said in other occasions, I last dealt with African countries in the State Department in the

late 80's. I have seen a new generation of leaders, ministers, officials, and business people. And I

am pleased that AGOA has played some part in moving in that direction.

As we move forward to improve on AGOA and to forge stronger trade and investment ties, we

will do our part to help African countries build their economies and share more fully in the

benefits of open markets and free trade. Because we want to expand opportunities for African

peoples and give them greater hope in a prosperous and secure future.

We will also continue to work with U.S. investors and industry who have been such strong

partners for us on AGOA, really been the heart of making this effort move, from the legislation

to it’s implementation. And to ensure that AGOA and our larger trade policy toward Africa

addresses their interests and helps to boost trade in both directions.

Now over the next few days, and I think this is the most important part of AGOA, we will have a

chance to learn from our visitors and guests from Africa. So I want to thank you for taking the

time to come, for participating, for helping, and for sharing your perspectives.

 

And the most natural way is to have my colleague Minister Kituyi who I know is also going to

speak today.

Thank you.

 
click here for printer friendly version
 




Help Link Site Map Link Contact Us Link
 
 Search Title Image
Document Library Link