Ambassador Mary Beth Leonard's Remarks During Panel Discussion on AGOA and the Continental Free Trade Agreement (CFTA)
Distinguished colleagues, good afternoon.
Thank you for the opportunity to speak with you today. Before I begin, I would like to acknowledge Togo’s role as the host for the 2017 AGOA Ministerial Forum. I am confident that next year’s Forum will lead to productive discussions that will further deepen the U.S.-Africa trade relationship. This week’s deliberations will play a significant role in framing those discussions and potential outcomes.
Next month, we will mark the 10th anniversary of the establishment of the U.S. Mission to the African Union. We are indeed proud to have been the first non-African Mission dedicated exclusively to the AU. The United States values the long-standing cooperative partnership it shares with AU, and is committed to working with the AU on both trade and development issues to bolster growth and unlock economic potential across Africa.
The African Growth and Opportunity Act, most commonly referred to as AGOA, is the foundation of U.S. economic engagement with Africa. It links African markets to the United States – and to one another.
Since 2000, AGOA has
been the cornerstone of U.S. economic policy in Africa. And it’s having good success. For example, non-extractive exports have
increased almost 200 percent, rising to $4.1 billion in 2015. It is about exports and investments. And U.S.
investment in sub-Saharan Africa rose from $9 billion in 2001 to more than $34
billion in 2014.
By providing duty-free
access to the U.S. market, AGOA is helping eligible nations grow, diversify
their exports to the United States, and create employment and inclusive
economic growth. Under AGOA, eligible
countries can export products, including value-added manufactured items such as
apparel, to the United States duty-free.
Many of our colleagues and partners have wondered what the new administration means for our work in Africa. In addressing that issue, I would first remind everyone of the strong bi-partisan support Africa policy has enjoyed over the years and through different administrations.
For instance, the U.S. Congress overwhelmingly approved legislation to re-authorize AGOA for ten years through the AGOA Extension and Enhancement Act of 2015, including third-country fabric provisions to help sub-Saharan African countries develop their textile and apparel industries. This is a strong signal that investors can and should invest with confidence in Africa.
The new legislation also added a clause that specifically called for the “promotion of the role of women in social and economic development.” We commend representatives from the African Women’s Entrepreneurship Program (AWEP), civil society, and the private sector for their efforts to elevate the importance of gender in trade. As a result of their efforts, for the first time this year, the Secretary’s Office of Global Women’s Issues (S/GWI), plans to host a Ministerial event at the AGOA Forum focusing on Women and Trade, to realize the goals of Congress’ new language relating to women in AGOA.
We think AGOA is important to generate economic growth in Africa. However, tariff preferences alone will not be sufficient in transforming African economies and fully bringing Africa into the 21st century global economy. There have been significant changes in Africa and the global trade policy landscape in the nearly two decades since AGOA came into effect.
Africa has moved towards greater market opening and regional economic integration including through the Tri-Partite and Continental free trade negotiations, and has begun working toward greater integration with outside partners, notably through Economic Partnership Agreements with the EU.
And the U.S. now has 20 FTA partners compared to the three it had in 2000 when AGOA was launched. Within this context, AGOA will simply not provide the framework needed for American businesses to compete on a level playing field with European and other competitors in growing African markets.
AGOA is about opportunity—but it requires actions on the part of beneficiaries to take advantage of them. In the first 15 years of the program, many AGOA beneficiary countries had not made AGOA utilization a central part of their trade and development policies. The 10-year extension of AGOA provides another opportunity—and one that is longer term than any previous extension—for countries to develop AGOA strategies, and provides certainty to African producers, U.S. buyers, and potential investors that want to source from Africa to take advantage of the market-access benefits afforded under AGOA.
Second, to be able to make the fullest use of AGOA, countries need to tackle both supply- and demand-side constraints that impede the ability of many African countries to take advantage of the program. The U.S. government can help through coordinated technical assistance. The AGOA utilization strategies may be important tools in this regard as well.
Most importantly, it is the private sector who ultimately decides where they will invest and which countries they will use as an export base. Businesses vote with their feet. The countries that have an open trade and investment environment will be able to take greater advantage of AGOA and attract more investment.
Our view has long been that more is needed to be done than tariff reductions to spur trade and investment. For instance, services represent a huge and growing swath of many of your economies – in many cases contributing more to GDP than trade in goods. A trade arrangement that does not address barriers to trade in the services sector will fail to address a key aspect of the trade relationship. Similarly, investor protections can be an important factor in attracting investment.
And our companies are increasingly concerned about issues of labor and environmental sustainability in seeking out new sources of goods and services, and new investment locations. And, of course, they want to operate in markets in which their intellectual property is protected.
It was within this context, the U.S. recently prepared a report that examines the future of the U.S.-Africa trade relationship, referred to by the Minister as “Beyond AGOA”, which makes the case for why each of these areas, and others, is important. The report also suggests that all countries can – and should – make progress on these fronts, even those countries unwilling or unable to move away from preferences in the near term. The report suggests a series of scalable standards that could serve as a basis for reforms over time. Now is the time to engage in a general discussion with our African partners of the long-term objectives of a future U.S.-Africa trade and investment relationship, and the Beyond AGOA report can serve as a basis to further that dialogue.
In conclusion, the U.S. remains committed to helping our African partners realize the full benefits of AGOA and to strengthen AU member states economies in preparation for a post-AGOA world. Our African trade hubs located across the continent work with AU member states to identify best practices in target sectors that offer the most opportunities to increase exports. I look forward to hearing the other panelist’s views to our ensuing discussion.