A Bill before Congress aims to increase United States trade with Africa, but it seems to benefit multinationals more than developing countries David Le Page An elephant dancing around to avoid a mouse. That’s the impression the United States gives in its efforts to substitute more trade for aid in its relations with Africa while avoiding threats to its domestic industries.
The efforts come in the form of a freer trade Bill – the African Growth and Opportunity Act, activated by US President Bill Clinton last month; the “threat” is Africa’s clothing industry – which currently contributes just 0,5% of US clothing imports.
The Act has been the subject of bitter tussles within the US, having split the Congressional black caucus between those that supported it and those that opposed it bitterly as compromising the freedom of African countries. In theory, the Act gives eligible sub- Saharan countries free access to US markets for certain categories of products. Many observers feel there can be little doubting the good intentions of those who engineered the Act, nor the struggles they went through to pass it over the objections of a thriving US protectionist lobby. But the Act reflects a fundamental conflict in US – and Western – policy: that while developing countries are being told to liberalise and restructure their economies, they simultaneously face incredible resistance to true free trade from those ostensibly its ideological champions. In the same way that South Africa was hit with last-minute changes to its trade pact with the European Union (EU), Africa almost lost out through 11th-hour qualifications to the Act. Just before the Bill went through, the Clinton administration published an un- negotiated set of rules dictating what steps African customs authorities must take if their country’s products are to be certified for import into the US. Immediate protests from US importers and legislators saw the demands moderated at the end of the week, but they remain far tougher than those enforced under the North American Free Trade Agreement. The Americans insist they will treat Africa better than has the EU. “We won’t come back on grappa,” said a US embassy official. Nonetheless, exports to the US will still be subject to a rigorous “visa” system. This is intended to prevent “transshipment”, where goods from a third country are shipped through Africa to avoid tariff and quota restrictions.
These caveats can seem ridiculous given that only three African countries are among the top 50 exporters to the US, most of that trade being oil from Angola and Nigeria. Nor is everyone convinced transshipment would be a bad thing. Economist Nico Czypionka of Societe Generale believes transshipment through Mauritius from the mid-1980s helped build the island’s own thriving clothing industry. He believes that if Chinese companies could sew buttons on to Asian-made shirts in Africa, thereby getting visa clearance, it would be good for Africa, however infuriating for the US. The evolution of the Act during the four years it took to make it law does reflect positive shifts in relations between the developing and developed worlds. Early versions demanded strenuous compliance with International Monetary Fund (IMF) structural adjustment programmes and World Trade Organisation rules from candidate countries. These requirements have been dropped, though the Act still demands African countries make progress towards democracy, market economies and meeting new legal and regulatory requirements.
The Act is intended to make doing business in Africa far easier for multinationals. Sadly, the list of US companies who supported it in Congress includes the likes of Chevron, one of the worst polluters in the US and which did great business in East Timor under Indonesian rule. On US corporate conduct in Africa there will be no constraints, as proposed in a defeated alternative – the HOPE for Africa bill. One Congresswoman, Maxine Walters, described the Act as a “Christmas tree” for multinationals.
US officials constantly represent the Act as unilaterally lifting all barriers to trade. But in fact it demands at least “progress” from Africa in eliminating “barriers to US trade and investment”. Moreover, the access granted is not unlimited and the mechanisms of trade provide considerable scope for manipulation.
Much of the Bill is devoted to painstakingly setting out rules for clothing and textile trade – capped for now at 1,5% of total clothing imports, and increasing to 3,5% by 2007.
The initial categories of African goods given free access to the US include token items such as electronics – Africa’s electronics industry being very far from a threat.
Czypionka believes the Act could indeed be good for Africa, but that the benefits are likely to flow slowly even if Africans do “decide to walk on the red carpet” that has been laid out. He worries that African companies are not as energetic in pursuing opportunity as Asian companies, though the Department of Trade and Industry says the opportunity has generated “an overwhelming response” from local businesses. He also points out that “the US is still riddled with quota agreements” and subsidies, particularly in agriculture. It’s the scale of this protectionism that often seems to be lost on fervent advocates of the Act. At a meeting between South African government officials and NGOs during the recent IMF/World Bank meetings in Prague, it was pointed out that the value of quota and tariff barriers among the developed Organisation for Economic Co- operation and Development countries amounts to $300-billion, rivalling the GDP of the whole of Africa. Given obstacles of this scale, the Act could indeed end up being, as one SA government official describes it, “a chocolate box cast into the midst of great want”.