Trade, investment top Obama agenda during Africa trip

   President Obama wrapped up a visit to South Africa, Senegal and Tanzania, where he announced an initiative to increase trade and investment in sub-Saharan Africa as well as a redoubling of efforts to combat poaching and illegal trafficking of wildlife.
   The Trade Africa initiative is designed to move the relationship between one of the fastest growing regions and the United States from one of dependency on U.S. development and food aid to a sustainable economic partnership.
   “I’m also here because, in our global economy, our fortunes are linked like never before. So more growth and opportunity in Africa can mean more growth and opportunity in the United States. And this is not charity; this is self-interest,” Obama said in a speech to a large group of business leaders in Dar es Salaam, Tanzania on Monday after attending a smaller meeting of U.S. and African business executives, including ones from General Electric, Microsoft and Coca-Cola. “And that’s why a key element of my engagement with Africa, and a key focus during this trip, has been to promote trade and investment that can create jobs on both sides of the Atlantic. And I believe we can accomplish that, because we’ve got an enormous opportunity to unleash the next era of African growth…
  “So, we’re making progress, but we’re here because we know there’s a lot more work that has to be done. There’s a lot of untapped potential. The entire GDP of sub-Saharan Africa is still less than $2 trillion – which is about the same as Italy. Our entire trade with Africa is about the same as our trade with Brazil or South Korea – countries with a fraction of Africa’s population,” the president said.
   U.S. officials say they hope to create an environment that enables greater trade by encouraging regional integration, legal reforms that break down barriers to the free flow of goods and services, greater government transparency and anti-corruption measures.
   Trade Africa will initially focus on the East African Community (EAC) – Burundi, Kenya, Rwanda, Tanzania, and Uganda. The five countries, with a population of more than 130 million people and increasingly stable and pro-business regulations, and a growing, educated middle class, represent a significant market for U.S. exports and investment, according to the White House. Intra-EAC trade has doubled in the past five years, and the region’s GDP has quadrupled in the past decade to more than $80 billion.
  In its initial phase, Trade Africa aims to double intra-regional trade in the EAC, increase EAC exports to the United States by 40 percent, reduce by 15 percent the average time needed to import or export a container from the ports of Mombasa or Dar es Salaam to land-locked Burundi and Rwanda in the EAC’s interior, and decrease by 30 percent the average time a truck takes to transit selected borders.
   “Trucks will wait for, oftentimes, days, to get through the border crossing, crosses to the next country and face another border crossing with a different customs system. All these things add costs and create a lack of competitiveness for products coming out of this region,” he told reporters on Air Force One. Some of his comments were replayed in a report by National Public Radio’s “Morning Edition.”
   Coffee shipments, for example, take more than 42 days to get from Rwanda to a port compared to 14 days to export coffee out of Columbia, he said.
   Trade Africa builds upon the White House strategy launched one year ago to promote economic growth in sub-Saharan Africa by helping countries in the region diversify their economies beyond natural resource development, remove trade impediments and foster strong governance structures. In December, the Commerce Department followed up with a “Doing Business in Africa” campaign to help U.S. companies, especially small businesses, take advantage of  federal trade promotion and financing programs and learn about opportunities in sub-Saharan Africa.
   Sub-Saharan Africa had combined GDP of $1.25 trillion in 2011 and includes six of the 10 fastest-growing economies in the world, according to the World Bank. U.S. merchandise exports to the region have tripled in the past decade and now total more than $21 billion. The International Monetary Fund projects sub-Saharan Africa to grow between 5 and six percent annually during the next two years.
   Still trade with Africa only accounts for 2.6 percent of total U.S. trade.
   U.S. and African officials have already taken several steps to increase trade and investment, according to a White House fact sheet, including:

• Exploration of a U.S.-EAC Investment Treaty to contribute to a more attractive investment environment. 
• Launch of negotiations on a Trade Facilitation Agreement and expansion of June 2012 Trade and Investment Partnership to include regulatory issues that affect the competitiveness of EAC regional and global trade, particularly the development of product standards, and regulatory systems related to food safety and plant and animal health. 
• Establishment of a new U.S.–EAC Commercial Dialogue to bring the private sector together with policy makers and increase opportunities for trade and investment.
• Transformation of the U.S.–Africa Trade Hubs into U.S. Trade and Investment Centers to provide information, advisory services, and risk mitigation and financing to encourage linkages between U.S. and East African investors and exporters. 
• Advancing the “Doing Business in Africa” campaign to encourage U.S. businesses to take advantage of growing trade and investment opportunities and to promote trade missions, reverse trade missions, trade shows, and business-to-business matchmaking in key sectors. 

   Under Trade Africa, the United States is also supporting the EAC’s efforts to advance regional integration, through bilateral and regional trade facilitation and a new partnership with TradeMark East Africa, with specific focus on:

• Reducing barriers at borders, including by moving to single border crossings and implementing customs modernization programs using innovative technologies that allow customs services to communicate with each other. 
• Supporting the transition to a single EAC customs and revenue sharing authority. 
• Addressing barriers to transit that constrain the region’s competitiveness, 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.   

  The White House also said it 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 and, specifically, to:

• Build 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.
• Formalize partnerships between American and African associations to increase trade through collaboration on trade shows and business-to-business matchmaking.
• Work 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.

  The U.S. plan also calls for providing more resources to help African countries develop democratic institutions, reduce bureaucracy and standardize regulations and educate leaders of the future that are considered necessary to help market economies take hold.
   In his speech, Obama said AGOA, which provides preferential duty treatment for certain African exports, needs to be improved and renewed. He said most U.S. trade with Africa only involves South Africa, Nigeria and Angola and that more Africans need the opportunity to export to the United States. 
   Potential reforms of the program will be discussed at an AGOA Forum in Addis Ababa, Ethiopia, next month.
   Obama said the U.S. effort in Africa will be sustained. New Commerce Secretary Penny Pritzker will lead a major trade mission to Africa in her first year and Treasury Secretary Jack Lew and Energy Secretary Ernest Moniz will also visit the region. The U.S. will also host a major conference on doing business in Africa that will be attended by American investors and businesses. Other trade missions next year will focus on trade in agriculture, energy and infrastructure.
   Meanwhile, President Obama earlier this week issued an executive order to better coordinate efforts across the U.S. government aimed at combating illegal trade in wildlife and assist foreign governments with building the capacity to enforce poaching laws. Elephants and rhinoceros are especially threatened by extinction because of demand for ivory decorations and rhinoceros horns, which are considered by many in Asia to have great medicinal properties when ground up.
   Obama announced in Tanzania that the State Department will provide an additional $10 million in regional and bilateral training and technical assistance to fight wildlife trafficking, including about $3 million each to South Africa and Kenya.
   The technical assistance is intended to teach how nations can tighten wildlife protection laws, enhance investigative and law enforcement capabilities, support regional law enforcement cooperation, develop better court systems for trying those arrested for poaching and smuggling, and promote the use of technologies to identify potential wildlife trafficking. – Eric Kulisch

CORRECTION

  The July 3 newswire “Trade, investment top Obama agenda during Africa trip” failed to name U.S. Trade Representative Michael Froman as the official being quoted on Air Force One about the U.S. strategy for trade development in Eastern Africa.