Africa: Trade, USA, 06/02/00

Africa: Trade, USA, 06/02/00

Africa: Trade, USA Date distributed (ymd): 000602 Document reposted by APIC

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Region: Continent-Wide Issue Areas: +economy/development+ +US policy focus+ Summary Contents: This posting contains two news stories, used by permission from InterPress Service (, summarizing reaction and content of the African Growth and Opportunity Act passed by the U.S. Congress and signed by President Clinton last week. The full text of the bill is available at Look for H.R. 434, and choose the "final version as passed by both houses."

A parallel posting today includes a newsletter with updates on Africa/Europe trade relations from Action for Southern Africa (ACTSA).

Of related interest, an "After Seattle" policy brief from the South Africa Council of Churches on developing countries' demands for change in the World Trade Organization:

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TRADE: South Africa Welcomes US Trade Bill With Reservations

By William Dhlamini

JOHANNESBURG May 18 (IPS) - South Africa has cautiously welcomed the new US African Growth and Opportunity which aims to give greater access to US markets for African, Caribbean and central American clothing and other exports but expressed reservations about the conditions attached to it.

"SA supports the broad thrust of the US trade bill, inasmuch as it, for the first time, opens the US market to products from developing nations, but the conditions attached to the bill remains a point of contention for the SA government," says Tsedisho Matona, director of bilateral trade in SA's department of trade and industry.

The US Senate passed the bill last week expanding US trade with 75 subsaharan African, Caribbean and central American nations by removing import duties on clothing and cutting tariffs on other goods from those regions.

The passage of the bill in the US Senate last week, came a week after approved by the House of Representatives.

US President Bill Clinton hopes to sign the trade bill into law during SA President Thabo Mbeki's visit to the US next week.

The trade bill known as the Africa-Caribbean Basin Initiative, is expected to benefit US clothing makers who have plants in Africa and the Caribbean, which in this case is defined to include Central American nations.

Under the bill the US provides duty-free, quota-free benefits to apparel made in Africa, Caribbean and central America from US produced yarn and fabric.

Critics of the measure - which includes SA's trade unions, civics and non-governmental organisations say the conditions attached, such as the US setting caps on textile imports, will do little to solve the major problems facing the region, such as AIDS and crippling developing country debts.

To reap the benefits of the trade bill, African, Caribbean and central American nations will have to privatise industry, cut corporate taxes, open their economies to foreign goods and pursue economic reforms similar to those required by the World Bank and International Monetary Fund.

African, Caribbean and central American countries must also abide by human rights standards set by the US. The US has the prerogative to decide which countries must benefit. If a country does not uphold a human rights culture acceptable to the US or does not pursue economic policies approved by the US, the US has the right to unilaterally suspend trade.

Matona says SA believes regional organisations such as the Southern African Development Community, SADC, or the Organisation of African Unity, OAU, should make such judgement calls.

Former SA President Nelson Mandela said at the introduction of the bill two years ago: "To us (SA), it is not acceptable."

Former University of Cape Town academic and now lecturing at Columbia University in the US, Mahmood Mandani says the trade bill "tilts the balance of reform in developing countries away from choice to an external exposition.

"It reads like a set of terms that every African country must meet before getting ease of access to the US market. Many people wonder whether the US is opting for regimes that are willing to impose economic reforms designed in Washington, even if these regimes deny the local opposition the right to organise.


TRADE-US: Clinton Signs Africa-Caribbean Bill

By Jim Lobe

WASHINGTON, May 18 (IPS) - Celebrating his first trade victory in six years, US President Bill Clinton Thursday signed into law the Trade and Development Act of 2000, which is designed to promote US commerce with sub-Saharan Africa and two dozen countries of the Caribbean Basin.

In an enthusiastic ceremony on the south lawn of the White House, Clinton told the two regions' diplomatic corps, as well as key lawmakers, that the legislation "will be good for the United States, good for Africa, good for Central America and the Caribbean."

"Let me say that the legislation I sign today is about more than development and trade; it's about transforming our relationship with two regions full of good people trying to build good futures, who are very important to our own future," he said.

He also called for quick Congressional approval of debt relief for the poorest nations and for proposed tax incentives to speed the development and delivery of vaccines for HIV/AIDS, malaria, and tuberculosis.

The new law - an amalgam of the Africa Growth and Opportunity Act (AGOA) and the Enhanced Caribbean Basin Initiative (CBI) - passed both houses of Congress by large majorities earlier this month after a protracted negotiation to reconcile different versions which they had approved last year.

Both the AGOA and Enhanced CBI bills had been pending in Congress for a long time. The Africa bill, which Clinton submitted in 1997 and which the House had approved the following year, was blocked in the Senate by lawmakers from textile-producing states.

Enhanced CBI, which was originally designed to give Caribbean nations many of the same trade advantages acquired by Mexico under the 1993 North American Free Trade Agreement (NAFTA), was held up by a coalition of textile interests, labour unions, and some environmental groups. It was actually rejected by the House in 1997 but revived when senators attached it to the Africa bill late last year.

As a result, the final version of both bills, which runs through 2008, is a pale shadow of what their supporters had originally hoped to achieve in the way of opening the US market much wider to exports from poor regions. For example, it fails to reduce tariffs and increase quotas on key farm commodities, such as sugar or coffee, important commodities in both regions, especially for poorer countries.

The new law's main provisions concern textiles and apparel. The original intent of the bills was to eliminate quotas and tariffs on these products from beneficiary countries. But that proved politically impossible. As a result, a complex set of rules was devised for each region.

Apparel made in both regions from US yarn and fabric may now enter the US market duty-free, a provision that favours the Caribbean in particular, due to the major transport costs involved in shipping goods to and from Africa.

African textile and apparel manufacturers, however, could benefit more by two other provisions in the law. Apparel shipped from Africa and made from regional fabric and yarn will be accorded duty- and quota-free benefits, up to a ceiling ranging from 1.5 percent to 3.5 percent of all US apparel imports over eight years. All apparel exports from Africa currently add up to less than one percent of the US import market with a value of about 580 million dollars. [Under the caps in the bill, apparel exports to the U.S. made of regional and third-country fiber could reach $4.2 billion in the year 2008].

South Africa and Mauritius, the region's two most important exporters, could be major beneficiaries of this provision, according to a 1997 government study here.

In addition, apparel made in Africa from non-regional, non-US fabric will also be given duty- and quota-free treatment, provided that the exporting country's annual per capita income is less than 1,500 dollars. This provision could prove a boon to Kenya, Lesotho, Swaziland, Madagascar, and Zimbabwe, all of which currently export apparel to the United States.

It could also help eight other countries - Cameroon, Cote d'Ivoire, Ghana, Malawi, Mozambique, Nigeria, Tanzania, and Zambia - which have the potential to expand apparel exports to the United States, according to the same study.

To prevent illegal transhipments of goods made or assembled outside Africa, the law provides additional funding for US Customs inspection and requires beneficiary countries to upgrade their own monitoring practices.

In addition to duty-free treatment for apparel made in CBI countries from US yarn and fabric, Caribbean exporters may receive the same benefits for knit apparel made from regional fabric up to a cap of 250 million square meters during the first year, or about 10 percent of what the region exported to the United States last year. That ceiling will rise by 16 percent each year for the following three years and will be capped at 450 million square meters after that.

The law also extends trade benefits already enjoyed by CBI countries through 2008. At the same time, it requires beneficiary countries to guarantee intellectual property rights, protect foreign investment, improve market access for US exports, ensure internationally recognised worker rights, and eliminate the worst forms of child labour.

It applies similar conditions to African beneficiaries. Under the law, the president must certify that a country is making "continual progress" towards establishing "a market-based economy" which, among other things, provides national treatment to foreign investment, ensures the rules of law, and protects worker rights.

Critics have charged that these conditions amount to a "new colonialism" against Africa which place US corporate interests above those of most poor Africans.

The law also creates a US-Africa Trade and Economic Co-operation Forum, similar to the Asia-Pacific Economic Co-operation (APEC) forum, to facilitate regular trade and investment policy discussions between US and African officials and authorises the president to put together a plan for entering free-trade agreements with those African countries which fully meet the law's eligibility requirements.

At present, Africa accounts for only one percent of all US exports, imports and foreign investment which are concentrated in only a handful of countries. In 1999, 70 percent of US exports to the region (5.5 billion dollars) went to only five countries - South Africa, Nigeria, Angola, Ghana, and Equatorial Guinea - and 92 percent of US imports (14 billion dollars) came from four countries - South Africa and oil-exporters Nigeria, Angola, and Gabon, according to recent Commerce Department statistics.

Two-way trade with CBI countries, which include the seven nations of Central America, Guyana, Suriname, and all Caribbean island- countries except Cuba, last year was - at more than 40 billion dollars - twice as great as trade with Africa.


Message-Id: <> From: "APIC" <> Date: Fri, 2 Jun 2000 12:12:41 -0500 Subject: Africa: Trade, USA

Editor: Ali B. Ali-Dinar

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