Secretary of State Hillary Clinton has arrived in the Kenyan capital Nairobi Tuesday, the first stop on a seven-nation visit to Africa. She will be taking part in a forum that has been a centerpiece of U.S. trade, aid and investment policy in Sub-Saharan Africa for the past eight years.
Hillary Clinton's first visit to Africa as secretary of state will officially begin on Wednesday, when she will speak at the ministerial opening ceremony of the Africa Growth and Opportunity Act forum.
Also known as AGOA, the act was signed into law in 2000 by Secretary Clinton's husband, former President Bill Clinton, to expand benefits under an existing Generalized System of Preferences program. AGOA provides 41 eligible countries in Sub-Saharan Africa duty and quota free access to U.S. markets for certain African-made goods, especially textiles and apparels. Eligibility is based on a country's commitment to good governance and free trade and it can be revoked.
Kenyan economist James Shikwati says the topic that will likely dominate Ms. Clinton's talks with African ministers of commerce, trade and finance will be on how eligible countries can fully exploit the benefits of AGOA.
Shikwati says although AGOA is credited with helping Sub-Saharan Africa increase the volume of trade with the United States by more than 50 percent since 1999, non-oil exports under AGOA are still negligible compared to developing countries in Asia.
"If you look at the trade volumes, especially for last year, 80 percent is actually crude oil," Shikwati said. "Twenty percent is the only window, where 7,000 plus products are struggling to make the American markets. So, when you look at that kind of arrangement, it clearly points [out] that America is benefiting more than the African people."
Washington-based public policy organization, The Brookings Institution, estimates that nearly 96 percent, or $56.3 billion worth of trade under AGOA in 2008, consisted of energy-related products. In the area of apparel exports, Sub-Saharan Africa accounted for little more than one percent of the total market in 2008, nearly three times less than what Bangladesh exported to the United States in the same year.
Brookings says several factors have played a role in limiting AGOA's potential. The high cost of doing business has kept the African continent uncompetitive; AGOA has not done enough to encourage eligible countries to diversify their economies to attract American capital; and cumbersome rules and regulations in the United States prevent African agricultural products from reaching U.S. markets.
Shikwati says the challenge for the United States and Sub-Saharan Africa now is to transform AGOA from a largely petroleum-importing initiative to one that Africa and its people can fully exploit. To do that, he says African nations participating in AGOA must identify what it is they want from America.
"We have a trade pact, where America understands what it wants and is very clear about what it wants. But African countries are yet to even figure out what they want," Shikwati said. "If I use Kenya as an example, you will get government officials, business people thinking in terms of 'What can America do for us?' when in essence, we should be exploiting some of the ideas our interaction with American are churning out. When a country understands what it wants, it develops its interests and marshals its people to exploit available opportunities."
International anti-poverty agency, ActionAid, is also urging African leaders and the United States to make sure that any increase in trade and jobs under AGOA is accompanied by efforts to improve working conditions for laborers and respect for human rights.