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Africa Policy E-JournalAfrica: US Trade Policy (Commentary), 1 In recent years, US economic policies towards Africa have become the subject of growing debate. A number of references to recent executive and legislative policy, as well as to NGO commentary and critique, can be found in a previous posting: http://www.africapolicy.org/docs97/eco9708.htm This posting and the next contain a two-part commentary by Tetteh Hormeku of the Third World Network in Accra, Ghana, publishers of African Agenda. The previous posting cited above contained a commentary by Oduor Ong'wen of EcoNews Africa in Kenya.
U.S. TRADE POLICY FOR AFRICA IS INTERVENTION BY OTHER MEANS The US President's recently announced trade and investment initiative with regard to Africa is not aimed at helping that continent rebuild its economic capacities. Instead, the initiative is very much in the mould of America's old militaristic intervention in Africa, seeking primarily to promote American interests, this time in competition with Europe. (First in a two-part analysis of recent US policy on Africa) By Tetteh Hormeku Third World Network Features Accra: To all outward appearances, Africa's big moment at the June 1997 Denver Summit of the Eight was US President Clinton's trade and investment initiative, offering expanded trade concessions to African countries to support further market-oriented economic reforms. For many the initiative represented a welcome departure from America's past policy of subversive intervention in Africa. The US seemed ready at last to help Africa build its economic capacities. Nothing could be more deceptive. What Clinton announced in Denver was not really about Africans, but about American business and competition with Europe. Ron Brown, the late US Secretary for Commerce, said as much when he visited Ghana in early 1996 on his five-country African tour as part of the processes leading to the formulation of Clinton's initiative. Brown told a meeting of Ghanaian business people that the US would no longer cede the African market to her European friends or anyone else. 'What I expect in Ghana,' he added, 'is the continued move toward more reforms and privatisation and an aggressive pursuit by American companies of business opportunities in Ghana.' Africa, as the 1996 US policy document 'Comprehensive Trade and Development Policy for the Countries of Africa' put it, is the 'last frontier for American businesses'. The Clinton initiative thus is very much in the mould of America's old militaristic intervention in Africa, seeking primarily to promote American interests. As in the old times, the content of policy is very much shaped by competition against an adversary from outside the African continent: Europe now takes the place of the old Soviet adversary. These may be the real factors behind the European grumbling (led by France) which greeted the Clinton initiative at the Denver summit. Judging from the summit final communique, which affirmed deeper International Monetary Fund/World Bank-type market reforms and strengthened World Trade Organisation disciplines in Africa, Clinton's interventions in Denver must have had one overriding effect. That is to bind his partners-turned-primary competitors to a framework for competition over Africa which is consistent with the drive to promote American business interests. The summit, then, may have served to secure the international front for the policy initiatives being developed for Africa inside America, including the bi-partisan Africa Growth and Opportunity Bill now in the US Congress. Africans, in their turn, may come to find all this every bit as subversive of their independent economic and political options as America's 'old ways'. The hard-nosed US drive in Africa which is yet aimed at Europe is not accidental. It derives partly from the fact that existing US investment is narrow and shallow compared to Europe's. It is also because the sectors of African economies that US businesses see as an opportunity for profit demand an even tougher stance against potential competitors, and at the same time require sweeping changes to Africa's economic policy frameworks and priorities. Up till 1993, US foreign direct investment (FDI) in Africa has been slight compared to Europe's, less diverse and with less rapid growth. According to the UN Conference on Trade and Development (UNCTAD) 1996 World Investment Directory (Volume V), US FDI flows to Africa fell from a third of all developed country FDI in the 1970s to 15% in the early 1990s. In absolute figures, FDI from the US stood at $308 million during the period of 1975-1980, fell to a negative $19 million in 1981-1985, and rose gradually again to $200 million during 1991-1993. Over the same period, Europe's FDI stood at $472 million in 1975-1980, dipped to $478 million in 1981-1985, and stood at $1,134 million at the end of 1991-1993. Furthermore, while US investment only rose from $173 million in 1986/1990 to $200 million in 1991/93, European investment rose from $441 million to $1,134 million. As for diversity of investment, among the 50 largest affiliates of foreign-based transnationals operating in the industrial and tertiary sectors in Africa in 1993, the six from the US are in distributive trade, transport and petro-chemicals, and metals sectors. By contrast, the 38 from the UK, France, and the Netherlands are into everything - food, beverages, tobacco, rubber, petro-chemicals, non-metallic minerals, coal and petroleum. Furthermore, among the 25 affiliates in finance and insurance, only two are from the US. The rest are predominantly from Western Europe. The story is much the same in the primary sector, particularly mining and other natural resource extraction. This is dominated by South African, Western European, Canadian and Australian concerns. US officials attribute this situation to European (mis)use of colonial ties. A Commerce Department policy paper which trailed Ron Brown to Ghana complained that 'foreign governments continue to use their ties with these (African) countries to maintain influence and win business'. The US attempts to redress this by its insistence, aggressively reaffirmed in Denver, that every aspect of international economic policy be derived from the indiscriminate market principles contained in WTO rules. The aim is to ensure 'that US investors (in other countries) are assured of being treated as fairly and favourably as domestic and other foreign competitors'. Adherence to WTO rules becomes even more important for another reason. Corporate America does not only seek to enter into areas now dominated by Europe, but has its sights on new areas opening up in African economies in the light of the new waves - the dismantling of the state sector in Africa. Key in this area is infrastructure. At one of the briefings held by the State Department at the Denver summit, Larry Summers, Deputy US Treasury Secretary, enthused about the opportunities opened up by 'private investment in utilities, private toll roads, in many cases, private water supply systems, and in a large number of cases privatisation of telecommunications infrastructures'. And in the words of Jeff Lang, Deputy US Trade Representative, telecommunications privatisation in particular are 'very attractive opportunities for American and other large telecommunications companies'. To promote this, the US seeks to promote in African countries particular commitment to the General Agreement in Trade in Services, one of the cardinal regimes of the WTO. The US has been pursuing its aims through different African fora. One of these has been the African Development Bank group where a long-standing American complaint has been about the domination of Europe, particularly France, in the procurement stakes in spite of superior American shares. Over the past two years, the US has been promoting reforms aiming to make 'the voting influence of the Bank's non-regional shareholders in its decision-making more commensurate with their financial contribution'. Parallel to this are efforts to get the Africa Development Fund, the concessionary wing of the Bank, to 'expand lending to the private sector for infrastructure projects'. Another forum has been African governments themselves - the main target of Ron Brown's visit to Ghana, Uganda, Cote d'Ivoire, Kenya and Botswana in the early part of 1996. Taking with him plane-loads of US businessmen to talk directly to his counterparts in government, the visit resulted in contracts and agreements for American companies totalling $500 million, with the potential for future sales that eventually could total more than $3 billion in US exports. In Cote d'Ivoire, there were reported to be 40 US companies doing business at the time of the visit. Two years later, the number had risen to 80. The other fora fall under what is described in US policy documents as 'reverse trade missions'. Here, groups of African government officials, policy-makers and trade union leaders are emplaned to America for discussions with American industry. Aimed at 'acquainting American firms with new market entry opportunities and the Africans with US technologies and specific firms capabilities', the discussions invariably turn to issues of investment stategy and economic management. (The Ghanaians had their turn recently by a visit to North Carolina.) The Africans then return from these forums fully convinced of the nitty-gritty of macro-economics and management, all tailored to ensure the confidence of company shareholders. Even trade unionists become concerned with making sure that their demands are such that they do not drive away the foreign investor. - Third World Network Features (continued in part 2) About the writer: Tetteh Hormeku is economic researcher at the Africa Secretariat of the Third World Network in Accra. When reproducing this feature, please credit Third World Network Features and (if applicable) the cooperating magazine or agency involved in the article, and give the byline. Please send us cuttings. For more information, please contact: Third World Network 228, Macalister Road, 10400 Penang, Malaysia. Email: twn@igc.org; twnpen@twn.po.my Tel: (+604)2293511,2293612 & 2293713; Fax: (+604)2298106 & 2264505. Third World Network-Africa can be reached at P.O. Box 8604, Accra-North, Ghana; tel: 233-21-224069; fax: 233-21-773857; e-mail: isodec@ncs.com.gh.
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Africa Policy E-Journal
