Accessibility links

Breaking News

Bush to Discuss Trade Issues with African Leaders


U.S. President George W. Bush arrives in Africa on Tuesday for a five-day, five-nation tour of the continent. One of the issues expected to dominate Mr. Bush's trip: Africa's trade with the United States.

Africa has 13 percent of the world's people, but only two percent of global trade. President Bush and the five African leaders he will meet during his visit generally agree that the continent must increase its share of the global economy. But there are disagreements about whether the United States is doing enough to help African producers.

As he travels across Africa, Mr. Bush is expected to make the case that a law that the U.S. Congress approved three years ago, the African Growth and Opportunity Act, has made it easier for Africans to sell their goods in the United States.

One of the major features of the law, known as AGOA, is that it eliminated import duties for manufacturers in many African countries.

Here in South Africa, the automaker BMW is one of the companies that benefited most from AGOA. Last year, BMW's South Africa plant exported 25,000 of the 50,000 cars the plant produced to the United States. BMW's managing director in South Africa, Ian Robertson, points out that his company decided, because of AGOA, to increase production.

"And when AGOA came around, we stepped up our U.S. exports in 2000, and, in essence, we've gone in 1998 from 12,000 units to more than 50,000 units last year," he said. "So we've in essence quadrupled the size of our business, and of that, the largest part is under AGOA."

Mr. Roberston says the increased production has allowed BMW to create 900 new jobs in South Africa.

To be eligible for tax preferences under AGOA, African countries must show they are making progress toward a market-based economy and the rule of law, and following economic policies that will reduce poverty and protect workers' rights. Thirty eight countries this year met these criteria.

But critics say only a few of those countries have actually benefited from the law.

According to Oxfam Great Britain, which operates aid programs throughout Africa, of the 38 countries eligible for tax preferences, only six, including South Africa, have actually increased their exports to the United States.

Oxfam also says U.S. agricultural subsidies to American farmers, particularly in cotton and sugar, hurt African economies more than AGOA helps.

A spokeswoman for Oxfam, Helen Palmer, says the amount of these subsidies overwhelms even new increases in aid.

"The overall effect of U.S. trade policy in Africa is dominated by the way the U.S. subsidizes their own farmers," she said. "The subsidies paid to American cotton farmers are worth about $4 billion a year, which is more than the entire income of a West African country like Burkina Faso. And a large amount more than the U.S. pays to Africa in aid."

Even though Africans are likely to bring up these issues with Mr. Bush, few analysts expect that it will result in any serious re-evaluation of America's trade policies toward the continent. They point out that none of the countries most affected by the subsidies to American farmers is on his itinerary.