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US Trade Ties With Africa: Benefits Given, Opportunities Lost

U.S. Secretary of State Hillary Clinton and high-level delegations from countries in sub-Saharan Africa meet in Nairobi, Kenya Wednesday for the 8th annual Africa Growth and Opporunity Act (AGOA) forum.

Commonly known as AGOA, the forum will discuss how Africa can take better advantage of U.S. legislation signed into law by President Bill Clinton in 2000. It is the centerpiece of U.S. trade and investment policy in Africa.

AGOA provides 41 African countries with duty and quota free access to U.S. markets but it has met with limited success because of internal problems.

"The real problem with regard to U.S.-Africa trade has little to do with market access," Mwangi Kimenyi, a Senior Fellow at the Brookings Institution told VOA from Nairobi.

"Africa has not fully exploited the market access opportunities that are already available under AGOA," says the Washington, D.C.-based analyst. Those opportunities include trade preferences designed to help the textile and apparel industries as well as other designated African-made products.

According to Kimenyi's analysis, the United States imported $93 billion in apparel products in 2008, but only $1.1 billion from sub-Saharan countries.

Internal Problems Vs. External Benefits

There are several major problems cited by Kimenyi, not the least of which is a coordinated approach among the countries eligible to participate.

"There is no formal structure for member countries to negotiate with U.S. policymakers. Governments need to reach a concensus in advance and formulate specific positions," Kimenyi told VOA.

Other major problems include the cost of doing business in Africa and the inability of some countries to attract U.S. investment.

"The cost of doing business remains high in terms of regulatory burden and licensing procedures. Transportation is expensive and infrastructure needs to be improved," Kimenyi said.

Attracting U.S. investment has also been problematic since eligibility is based on a country's commitment to good governance and free trade and it can be revoked.

"If a country's status is revoked, the investment is lost and that is not a sound approach to doing business."

The AGOA forum is being held from August 4-8 in Nairobi, Kenya.