US must resist pressure to neglect Africa
June 26, 2009
By Rosa Whitaker
As US President Barack Obama's administration develops its Africa and trade policies, it is critical that it resists pressure from some special interests and members of Congress to support legislation that extends the duty-free access to the US market enjoyed by African nations under the African Growth and Opportunity Act (Agoa) to all least developed countries (LDCs).
While the sentiment is commendable, the result of such a broad-brush trade policy would be disastrous for Africa, particularly those countries that have used Agoa to grow their apparel and textile industries and, in so doing, created more than 300 000 jobs across the continent.
Last year the 48 countries of sub-Saharan Africa represented only 1.2 percent of the $95 billion (R760bn at current exchange rate) US apparel import market. Bangladesh alone captured 3.8 percent, more than triple the trade of Agoa's African beneficiary countries combined, and Cambodia accounted for 2.5 percent, more than twice as much as Africa.
Yes, Bangladesh and Cambodia both suffer poverty, but the difference is one of economic trajectory. Africa continues to be the only region of the world getting poorer and not converging with developed economies. Agoa offers hope and has demonstrated progress in reversing these trends.
Apparel has been the entry point into manufacturing for all countries, including the US and China. To cut Africa off as it is entering this labour-intensive sector is homicidal for the region. Extending Agoa benefits to other LDCs, such as Bangladesh and Cambodia, would almost certainly be the death knell for Africa's very promising, but still nascent, apparel sector.
Already, the continent's clothing exporters, faced with the global recession as well as supercompetitive, low-wage producers in Asia, are under severe stress.
Last year apparel exports from Africa to the US dropped by more than 10 percent, a decline more than three times greater than the contraction in the overall US textile and apparel market.
When you consider countries like Bangladesh, whose apparel and textile exports grew by 11 percent last year to about $3.5bn, or Cambodia, which exported more than $2bn in apparel and textiles to the US, it is easy to understand the necessity of maintaining Agoa's special benefits for African countries.
As economist Paul Collier points out in his book The Bottom Billion, Bangladesh and Cambodia have created hypercompetitive garment industries.
Trade preferences are clearly not needed for the hypercompetitive, but for the most vulnerable and fragile.
If one believes trade policies should have a developmental impact, as I do, trade preferences have to be targeted.
"When Asia broke into these markets, it did not have to compete with established low-cost producers, because it was the first on the block," Collier writes. "For (African countries) to break into these markets, they need temporary protection from Asia."
With a new administration and a new Congress, it is a good time to open up the discussion of how the US can develop a trade policy that serves our economic and development objectives. It is critical that we don't succumb to superficial, feel-good policies that could have devastating consequences for the people we mean to help.
I have always believed in and worked for more certainty and clarity in our trade preferences programmes. Certainly there is room for improvement in our trade relationship with all LDCs, but as Washington's retail interests try to dilute Agoa's apparel benefits under the banner of lifting all the world's poor to prosperity - in the process sacrificing 300 000 African workers and their families - I hope Obama will simply reply: "Not on my watch."
Rosa Whitaker, the president and chief executive of The Whitaker Group, was the first assistant US trade representative to Africa and a prime architect of Agoa
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