United States Partnering With African Countries To Boost Trade & Investment

OFFICE OF THE TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT WASHINGTON, D.C.

Trade has long been an effective way to move millions of people out of poverty around the world. The Obama Administration views trade as a critical component of an integrated approach to development policy. The United States partners with poor and developing countries on trade and investment through numerous successful programs and affiliations, offering duty-free treatment to many countries’ products, promoting high standards of accountability, transparency, and good governance, and providing special efforts to link trade and economic opportunity for countries ravaged by disaster or violence. The United States also
leverages public-private partnerships to achieve the maximum impact for communities in poor and developing countries.

African Growth and Opportunity Act (AGOA)
AGOA is the cornerstone of U.S. economic and trade policy towards the countries of sub-Saharan Africa, aimed at promoting free markets, expanding U.S.-African trade and investment, stimulating economic growth, and facilitating sub-Saharan Africa’s integration into the global economy. AGOA currently provides forty sub-Saharan African countries with duty-free access for practically all products they export to the United States. Since its enactment in 2000, two-way trade has grown to $82.1 billion in 2010, and AGOA exports to the United States have increased to $ 44.3 billion. While much of the increase is attributable to oil, non-oil AGOA trade has increased threefold, and includes non-traditional, value-added products such as apparel, footwear, processed agricultural products, and manufactured goods.

U.S. Aid for Trade
The United States is one of the largest single-country providers of Aid for Trade. Between 1999 and 2010, the U.S. government has obligated nearly $14 billion for trade-related assistance to developing countries, the majority of this -- $10 billion – was provided since the launch of the Aid for Trade initiative in 2005. A detailed breakdown of U.S. trade-related assistance by country and type of assistance is available at http://tcb.eads.usaidallnet.gov/.

The U.S. Agency for International Development is one of the principal contributors to U.S. Aid for Trade efforts, and working through over 70 missions around the world, has dramatically increased the percentage of assistance to LDCs in recent years. Over the last eight years, the
United States has committed over $2.3 billion of trade capacity building assistance to sub-Saharan Africa, including over $735 million in FY2010 alone.

African Competitiveness and Trade Expansion Initiative (ACTE)
In June 2011, the United States reinforced its long-standing commitment to trade capacity building in sub-Saharan Africa, by announcing the new African Competitiveness and Trade Expansion Initiative. This initiative will provide up to $120 million over four years to improve Africa’s capacity to produce and export competitive, value-added products, including those that can enter duty-free under AGOA, and to address supply-side constraints that impede African trade. ACTE will support the work of our three regional trade hubs in West, East/Central, and Southern Africa, and will help to drive economic development in African countries, and enhance trade opportunities among Africans and Americans alike. The majority of the countries served by the hubs are LDCs.


Millennium Challenge Corporation (MCC)
MCC accounts for the majority of U.S. Aid for Trade. MCC works in partnership with eligible countries that identify the greatest constraints to their own development and establish their own priorities to create sustainable economic growth. Many MCC partner countries place a high priority on increasing competiveness and facilitating regional and international trade, and many partner countries include trade capacity building as a priority in their proposals for poverty reduction assistance. As a result, approximately $4.7 billion—66 percent—of total MCC assistance to its partner countries since 2005 is considered Aid for Trade. Approximately 63 percent of MCC Aid for Trade is provided to LDCs. With respect to Africa specifically, well
over half of MCC compacts (15 of 23) are with African countries. In addition, consistent with the mandate for the WTO trade facilitation negotiations, many MCC compacts involve significant investments in infrastructure, and MCC assistance contributes over $2.8 billion to U.S. efforts to support trade facilitation
reforms.

Feed the Future
In 2009, at the L’Aquila G-8 Summit, the United States pledged at least $3.5 billion over three years for Feed the Future (FTF). FTF has as one of its objectives promoting economic growth from farmer to market by improving linkages to local, regional, and global markets and supporting an enabling environment for agricultural trade to minimize the impact of food price hikes. FTF investments are in agricultural and nutritional programs, and occur in two phases to help ensure the sustainability and increase the impact of these programs. FTF covers 20 countries, and has five regional programs. Since 2010, for sub-Saharan Africa, the FTF bilateral programs provided over $618 million in assistance with additional assistance through two
regional programs. Also, the United States contributes to the Global Agriculture and Food Security Program (GAFSP) which has made strong progress since its April 2010 launch. To date the United States has contributed $167 million of our $475 million pledge to GAFSP.

TIFAs and Bilateral Investment Treaties
The United States has Trade and Investment Framework Agreements (TIFAs) with eleven countries or regional economic organizations in sub-Saharan Africa. The United States also has a Trade, Investment and Development Cooperative Agreement (TIDCA) with the 5 countries of the Southern African Customs Union. Through these agreements, the United States and its key African partners are able to address a range of trade and investment issues, and work together to enhance two-way trade and investment. The United States has Bilateral Investment Treaties (BITs) with 6 countries, including one recently approved by the Senate with Rwanda. A BIT with Mauritius is under negotiation. The BITs are intended to strengthen investor protections
and encourage countries to continue market-oriented economic reforms.

United States-East African Community Trade and Investment Initiative
As part of a new U.S. - East African Community (EAC) initiative supporting regional integration, the United States, the EAC Secretariat, and the five EAC member states (Burundi, Kenya, Rwanda, Tanzania, and Uganda) have agreed to pursue a new trade and investment initiative. Under this new initiative, the United States and the EAC will explore a regional investment treaty, creation of trade enhancing agreements in areas such as trade facilitation, and the development of stronger commercial engagement between U.S. and EAC businesses. The development of intraregional markets is one of the most powerful engines for economic
growth. This is particularly true in Africa, where underdeveloped regional markets are believed to be a major constraint to growth. The EAC initiative may serve as a model for building the U.S. trade and investment relationship with Africa.

Partnership for Growth
As an outgrowth of President Obama’s Presidential Policy Directive on Global Development, the Partnership for Growth (PFG) is a signature effort focused on economic growth as the core priority for United States development efforts. Ghana and Tanzania are two of the four countries initially selected as PFG partners – countries in which the conditions for sustained economic growth are right, and which are likely to be the next generation of emerging markets.