Trade
Last updated June 2007
Africa is a far more significant trading partner for the U.S. than is
widely realized. The continent holds abundant human and natural resources,
and the U.S. is Africa’s largest single country market, purchasing
29.6% of the region’s exports in 2005. Two-way trade between the
U.S. and sub-Saharan Africa was over $70 billion in 2006; more than double
the total of $32.5 billion in 2003.
Trade represents a key element in U.S. policy toward Africa. Although
successive U.S. administrations have promoted trade as the engine of African
growth, the reality is that the U.S. continues to pursue trade policies
that are antithetical to Africa's interests. U.S. trade policies have
tended to perpetuate Africa's role as a source of raw materials and cheap
labor. The African Growth and Opportunity Act (AGOA) was approved by Congress
in 2000 and extended until 2015 in December 2006. AGOA was intended to
offer incentives to African countries to open their markets, but has brought
very little benefit to a few countries, and has not promoted sustainable
economic development.
Heightened U.S. interest in Africa's oil supply has increased the continent's
strategic importance to the U.S. and its future energy policies. As a
result, U.S. trade with Africa is highly concentrated on a small number
of major oil producers: Nigeria, Angola, and the Republic of the Congo
(Brazzaville). In 2006, these three countries accounted for more than
70% of U.S. imports from Africa. That same year, oil imports constituted
nearly 80% of all U.S. purchases from Africa (amounting to about $47 billion
out of $59 billion). Petroleum products make up 93% of AGOA imports. The
U.S. National Intelligence Council projects U.S. oil supplies from West
Africa will increase to 25% by 2015. This would surpass U.S. oil imports
from the entire Persian Gulf. Nigeria already accounts for more than 11%
of total U.S. oil imports, and was the 5th largest supplier of oil to
the U.S. in 2006.
In order for trade to boost African growth, the U.S. must look beyond
oil. It must commit to simplifying expanded market access for African
goods and ending the double standard in international trade rules. This
will require dismantling trade barriers that severely restrict access
for African products to U.S. markets. It will also require reducing subsidies
that hinder African exports, especially in the agricultural sector.
The debate over agricultural subsidies led to the breakdown of the 2003
World Trade Organization (WTO) Ministerial in Cancun, Mexico. This meeting
was meant to establish global rules to achieve the objectives outlined
by the Doha WTO round in 2001, such as fairer international trade rules.
In 2005, at WTO talks in Hong Kong, the year 2013 was set as a deadline
for the elimination of unfair agricultural subsidies. Little progress
has been made since then, and negotiations have yet to resume since their
collapse in July 2006. The failure of the Doha round has starkly illustrated
the lack of political will among wealthy nations to seriously address
the gross imbalances in the current global trade system.
The June 2007 communiqué produced by the G8 summit in Heiligendamm,
Germany reflects a similar attitude. Instead of offering concrete new
proposals, the G8 has chosen to rehash empty rhetoric while ignoring the
exploitative trade initiatives its members are pursuing individually.
President George Bush’s choice of Robert Zoellick to replace the
disgraced Paul Wolfowitz as head of the World Bank is also disturbing.
During his tenure as U.S. Trade Representative, Zoellick displayed an
excessive zeal for corporate interests and neoliberal policies and was
unwilling to respect the legitimate concerns of the Global South. There
is a dangerous risk that he will bring these viewpoints to his new position.
Restrictions on African access to U.S. markets, combined with agricultural
subsidies to U.S. agribusinesses, undermine Africa's competitiveness and
continue to constrict the continent's trade-related development. For example,
U.S. cotton subsidies reached almost $5 billion in 2005, in violation
of WTO rules, lowering global prices and harming the livelihoods of more
than 20 million cotton farmers in Africa. Ignoring the false comparative
advantage produced by subsidies, it costs three times more to produce
one pound of cotton in the U.S. than in Burkina Faso. According to the
2005 U.N. Human Development Report, the U.S. and other rich countries
pay their farmers $1 billion in subsidies per day.
African countries remain over-dependent on primary commodities and are
extremely vulnerable to swings in market prices. An enhanced economic
partnership between the U.S. and African countries requires more than
just expanded trade. The insistence of the U.S. on free trade and free
market solutions to Africa's development challenges fails to address the
structural sources of the continent's poverty. While trade is certainly
one important pillar within the framework of U.S. economic cooperation
with Africa, it is not sufficient to bring about economic development.
Investment, 100% debt cancellation for all African countries and development
assistance should also be essential components of a just economic relationship
between the U.S. and Africa.
Links
U.S. African Trade Profile 2006
"According to this annual U.S. Department of Commerce report, two-way trade between the United States and Sub-Saharan Africa rose in 2005, as both
exports and imports increased to more than $60 billion. However, trade between the U.S. and Africa is highly concentrated, with a small number of African countries accounting for an overwhelming share of the total for both imports and exports..."
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AGOA Homepage
"The African Growth and Opportunity Act (AGOA) website provides information about trade between the U.S. and Africa. In addition to the legislation itself, it provides the latest trade news, reports, trade statistics, etc..."
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The G-8 Announcement: Great Expectations Betrayed
July 8, 2005
"Africa Action today vehemently rejected the G-8 Summit statement on reducing poverty in Africa as inadequate and fraudulent. For all its hype, the G-8 summit failed to deliver on the promise of debt cancellation, trade reform, and aid..."
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The Economics of Failure: The Real Costs of ‘Free’ Trade for Poor Countries
"This June 2005 Christian Aid paper argues that “free trade” conditions attached to aid and debt cancellation do more harm than good. Trade liberalization has cost sub-Saharan Africa US$272 billion over the past 20 years, much more than the continent received in aid..."
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World Trade Organization Update
"Update of developments in the World Trade Organization (WTO) from the International Trade and Gender Network. It includes a discussion of the Special Session of the WTO Committee on Agriculture, particularly market access issues and domestic subsidies..."
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Africa's "Second Last Chance"
"Yao Graham of the Third World Network Africa criticizes the far-reaching neoliberal economic agenda imposed on Africa. Three years after the launch of NEPAD, African economies are buckling under free market policies, poverty and inequality indicators are worsening, and the promises of free trade remain a mirage..."
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Memorandum of Civil Society to the African Union Ministers of Trade
"Cairo, Egypt: As members of the WTO prepare towards the Ministerial Conference in Hong-Kong, African civil society organizations expressed their concern to the African Union’s Trade Ministers’ meeting that there is little evidence of progress in tackling the developmental concerns of African countries. On the contrary, the rich and powerful countries continue to force African countries to adopt free trade policies even as they protect their agricultural sectors..."
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The Walking Zombie of the WTO
"Global Exchange summary of developments in the World Trade Organization (WTO). It also reports on the meeting of more than 240 activists from 23 countries in Hong Kong to plan a strategy for mobilization against the WTO meeting in December..."
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Poor Numbers: The Impact of Trade Liberalization on World Poverty
"In this paper, Mark Weisbrot of the Center for Economic and Policy Research argues that the benefits of free trade are grossly exaggerated. Recent trade agreements have severely limited the ability of developing countries to pursue the same sorts of policies that the rich countries used in order to industrialize…"
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International Trade Policy: Violently Intent on keeping us in Poverty
"Riaz Tayob of the Southern and Eastern African Trade Information and Negotiations Institute (SEATINI) argues that Africa has religiously followed of the prescriptions of the former colonial powers with a spectacularly tragic outcome..."
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Behind the Collapse of the Cancun Ministerial
"A Third World Network analysis of the collapse of World Trade Organization (WTO) negotiations in Cancun. It concludes that if negotiating tactics used in Cancun persist, then each WTO Ministerial would be a poker game, whose fate depends on last-minute brinkmanship, with powerful countries trying their luck and using various methods to push their way through, and developing countries organizing themselves to resist the pressures..."
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Make Trade Fair
"Oxfam’s Make Trade Fair Campaign aims to change world trade rules so that trade can make a real difference in the fight against global poverty. It calls for improving market access for poor countries and ending the cycle of subsidized agricultural over-production and export dumping by rich countries..."
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U.S. & Nigeria: Thinking about Oil
"Africa Action’s Salih Booker and Bill Minter argue that if the U.S. wants to help Nigeria, Washington must look beyond Nigeria's oil and consider its people and their environment. After years of internal conflict and military rule, oil-rich Nigeria is once again one of Africa's most influential nations. Yet it still confronts staggering poverty and corruption..."
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U.S. Oil Politics in the 'Kuwait of Africa'
Ken Silverstein explores the implications of the discovery of oil in Equatorial Guinea. Because of this oil, there's been a slow but steady blossoming of relations between George W. Bush's administration and Brig. Gen. Teodoro Obiang Nguema Mbasogo, who took power in a coup in 1979..."
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Statement on U.S. Economic Cooperation with Africa
October 29, 2001 - Africa Action, Oxfam America, ActionAid USA & Third World Network - Africa
"A statement from Africa Action, Oxfam America, and ActionAid USA calling for a new approach to U.S. economic cooperation with Africa. It was timed to to coincide with the launch of the first U.S.- Sub-Saharan Africa Trade and Economic Cooperation Forum hosted by the White House and involving several hundred African and U.S. officials..."
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NAFTA for Africa
"Public Citizen published this analysis of the African Growth and Opportunity Act (AGOA). It challenges AGOA as undermining African interests in sovereign, equitable development in order to promote U.S. corporate control of African economies..."
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WTO Food and Agriculture Rules: Briefing on Critical Issues
"Vandana Shiva explores the implications of the World Trade Organization’s rules on agriculture. She argues that no country should be forced to open its borders to food commodities, especially
to foods that a nation already provides for itself and that minimum access serves only the interests of the exporter. Specifically, it benefits agribusiness, as it forces open new markets further expanding the control of corporations..."
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