Art Westneat Private Sector Advisor USAID AFR/SD/EGEA Washington

Transcription

1 Art Westneat Private Sector Advisor USAID AFR/SD/EGEA Washington TRADE AND MARKET ACCESS United Nations ECOSOC High-Level Segment Preparatory Meeting March ** Talking Points ** BACKGROUND The AGOA Legislation became law in May It is the first Legislation to promote trade between the United States and Africa. It was a bipartisan effort and currently it retains bipartisan support The AGOA Legislation was accompanied by Executive Branch action. o Between 1987 and 2001, USAID funded the $75 million inter-agency Africa Trade and Investment Policy (ATRIP) program. o Since 2002, USAID has continued the trade promotion effort through the $70 million Trade for Enterprise and Development (TRADE) Initiative. AGOA LEGISLATION The AGOA Legislation expanded duty-free treatment under the General System of Preferences (GSP) to AGOA eligible countries for more than 1,800 tariff line items in addition to the standard GSP list of approximately 4,600 available to non-agoa beneficiary countries The Legislation provides for duty-free and quota-free access to the US market without limits for apparel made in eligible SSA countries from US fabric, yarn and thread. The Legislation also provides for substantial growth of duty- free and quotafree apparel imports made from fabric produced in beneficiary countries. The percentage cap on apparel imports into the US made from African fabric and yarn grow to 3.5% of US apparel imports. The AGOA II Legislation, signed into law in August 2002, doubled this cap. The AGOA Legislation also promotes the importation of hand craft and traditional products. The Legislation authorizes an annual forum a gathering of African Ministers of Trade with US government officials - to review the progress and problems associated with the AGOA Legislation and US trade in general. AGOA ELIGIBILITY The AGOA eligibility of African countries is reviewed annually and certified by the President. The review panel considers the following factors in making its recommendation: o the promotion of market-based economies;

2 o the development of political pluralism and the rule of law; o the elimination of trade and investment barriers; o the protection of intellectual property rights; o the combating of corruption; o efforts to reduce poverty; o the expanding access to health care and educational opportunities; o the protection of human and worker rights; and o the elimination of certain child labor practices. AGOA RESULTS The clearest indicator of the success of the AGOA Legislation is found in the US International Trade Commission data for imports of Textiles and Apparel from AGOA eligible countries. There were no imports in 2000 when the Legislation was signed. At the end of 2003, imports in this category were $1.2 billion, up from $0.8 billion ($800 million) in AGOA imports (including GSP provisions) from Madagascar jumped from $79.7 million at the end of 2002 to million at the end of 2003, or percent. In early 2004, approximately 110 companies were operating in the apparel sector in Madagascar s export processing sone. Of these 48 firms produced and exported apparel to the US under AGOA. A smaller number of firms export principally to Europe. The direct employmentin the EPZ apparel firms is about 80,000 workers. Malawi s AGOA exports (excluding GSP) continued to grow in 2003, and now exceed $58 million. The number of jobs linked to AGOA grew slightly in 2003 to 7,500 workers. In a promising development. Malawi s primary textile producer was privatized. Revitalization of the producer under new ownership will link garment-makers to Malawi s cotton-growing and ginning sectors, thus deepening Malawi s AGOA supply chain and spreading AGOA benefits to more Malawians. AGOA Resource Centers have been set up in West Africa to encourage AGOA-related exports. In Lesotho, there are 41 apparel producing factories and two entities that specialize in embroidery. Two of the largest producers have made investments that will enable them to source fabric regionally. The first denim mill in Lesotho is due to start next month and will be employing 1,500 people at the outset. All products made in Lesotho are destined for the mid-range to low-end chain stores in the Unites States. In Mauritius there are 49 companies registered for the export of apparel to the United States under AGOA. These companies employ about 50,000 people. These companies export a wide variety of apparel goods to the US. There are currently five active spinning mill projects at various stages of realization in Mauritius. Six of Botswana s eight apparel producers have exported to the US under AGOA. The production force of the eight companies is 5,463 workers. Trade

3 figures indicate that Botswana significantly increased its exports to the US, from $4.58 million in 2002 to $6.32 million (including GSP) in In South Africa, excluding GSP, AGOA exports increased 26% to $998 million in 2003 from $789 million in Levi Strauss SA began exporting jeans to the US in August 2003 from its new production facility and increased its payroll from 220 to 300 over the past year. Again in South Africa, the South Africa International Business Linkage (SAIBL) program worked with 32 small and medium scale enterprises this past year to assist them with AGOA exports to the US; the value of these transactions is estimated at $8.3 million. The total value of exports to the US from Tanzania under AGOA is estimated a just under $1 million in A new factory opened recently as a direct result of AGOA and the Tanzania government s export processing zone policies. It is hiring 700 workers and expects to be exporting over $1 million by the end of Zambia exported $0.51 million in duty free goods to the US under AGOA I AGOA induced regional exports of yarn, however, are estimated to exceed $8 million. In December 2003, Niger was granted textile and apparel certification that allowed it to begin duty-free exports to the US. Since becoming AGOA-eligible, Namibia has benefited from high-profile foreign investment by Asian textile companies resulting in new factories, thousands of new jobs, and unprecedented levels of new apparel exports. Ramatex Namibia remains the highest-profile AGOA-related investment having invested nearly $200 million in its vertically integrated textile and garment manufacturing plant. Between Ramatex and Rhino Garments, an estimated 10,000 new jobs have been created. In Mozambique, two apparel companies exported to the US under AGOA in 2003, though one company has since closed operations. THE TRADE INITIATIVE President Bush announced the Trade for African Development and Enterprise (TRADE) Initiative at the first AGOA Forum in October TRADE is a multi-year trade capacity building initiative. TRADE will promote regional integration and regional cooperation by strengthening the ability of African countries and businesses to develop their export trade. The most easily identifiable feature of the TRADE Initiative is the creation of three regional trade development centers called Regional Hubs for Global Competitiveness: one in Botswana for southern Africa, one in Kenya for East and Central Africa, and a third in Ghana for West Africa. The will Hubs support country-based activities to facilitate national competitiveness in global markets. Resources flowing through the TRADE initiative will: o Promote U.S. African business linkages; o Enhance the competitiveness of African products and services;

4 o Expand the role that trade can play in African poverty reduction strategies; o Improve the delivery of public services supporting trade; o Build African capacity for trade policy formulation and implementation; and o Strengthen the enabling environment for African businesses. TRADE seeks to mobilize a coalition of U.S. and host-country partners from both the government and the private sector to support specific trade capacity building needs. The Hubs will facilitate capacity building activities through linkages with African regional trade organizations and networks, in cooperation with African and U.S. educational and business networks, U.S. and African government agencies, and other donors. TRADE will assist African businesses to be better able to take advantage of the African Growth and Opportunity Act (AGOA) market access opportunities. Trade will help African country partners to engage more proactively in the development of the global, multilateral trading system as well as to benefit from the growth of regional trading arrangements. The most developed of the Hubs is the Botswana Hub which the President visited as part of his Africa trip last summer. Under the provisions of the AGOA Legislation and through the TRADE Hub implementation mechanism, the United States is opening up its markets to Africa s agricultural products. At the second AGOA Forum in Mauritius in January 2003, President Bush announced the placement of Animal and Plant Health Inspection Service (APHIS) technicians at each of the three Hubs to assist African sanitary and phyto-sanitary services prepare their agricultural products for export to the United States. Procedural changes within the administration of APHIS itself mean that African agricultural products will receive prompt, unambiguous attention by the sanitary services of the United States. The first products to benefit from these reforms are from Zambia and completion of the import-rule making process is anticipated by year s end. USAID TRADE CAPACITY BUILDING In addition to implementing, the AGOA Legislation, USAID conducts an active African trade capacity building program, part of the US response to the Doha Development Agenda. The budget for which reached $82.1 million in the past year. PROBLEMS FACING AGOA Third-Country Sourcing A provision in the AGOA Legislation will see the end of the third-country preferential sourcing provision this fall. The intent of this clause was to allow AGOA-eligible countries to take

5 advantage of the Legislation while, at the same time, encouraging the development of a vertically integrated African textile industry. The tradeoff in the debate over the extension of this provision is between effects on current levels of employment and investment plans. Current draft AGOA III Legislation calls for an extension of this provision. The Multi-Fiber Agreement comes to an end in January next year. This market liberalization event will open world markets to considerable competition in the textile and apparel market. The economics of Chinese production, for example, are such that AGOA benefits may pale by comparison. The recent double-digit slip in the dollar s value against other currencies means that US imports from Africa are more expensive than they were when the Legislation was passed. This has affected the economics of African textile production and exports to the Unites States under AGOA. AGOA III THE WAY FORWARD The American Congress is currently debating the terms of a renewed AGOA Legislation. There are as many as three current versions. The basic outline includes the following points The AGOA Legislation will be extended from 2008 forward to at least Duty-free treatment may be extended to previously excluded agricultural products. The third-country fabric benefit would be extended. Liberalization of the export rules for the export of African-print fabrics to the US market has been proposed Technical assistance to help meet scientific requirements affecting African agricultural exports to the US is to be expanded Increased technical assistance for the development of trade strategies is anticipated OPIC and EX-IM are being asked to expand their programs in the areas of eco-tourism, agriculture, and textiles. Selected tax reforms have been proposed. THANK YOU