A Mission For Trade, Oil, And Power

by Farah Khan

President Bush meets with President Abdoulaye Wade of Senegal. Even though Senegal is considered friendly to the U.S, Senegalese were ordered to stay inside, keep their windows closed, and lock sheep in their pens during the Bush visit

If you are talking to representatives of the U.S. administration, the prognosis is rosy, with the glass filling up rapidly. AGOA was key this week to President George W. Bush's trip to five African capitals. Before his visit, at a Washington briefing, he said, "AGOA is proving the power of trade."

This week Bush visited Senegal, South Africa, Botswana, Uganda and Nigeria, the president's first official trip to Africa, though he attended independence anniversary celebrations in the Gambia on his father's -- then President George Bush senior -- behalf in 1992.

He boasted that African exports to the United States had grown 10 percent from its levels in 2001 to nine billion U.S. dollars. "From countries all across the continent of Africa, AGOA is helping to reform old economies, creating new jobs, is attracting new investment; most importantly (it) is offering hope to millions of Africans."

This week, South Africa's President Thabo Mbeki said that, "AGOA has had a very big impact in terms of the development of our economy."

African exports currently comprise two percent of total exports into the United States, the world's largest market. Most goods are textiles and clothing, an area in which Africa enjoys a competitive advantage because of its natural resources and comparatively modest labour costs.

South Africa's clothing industry has been saved because companies in the KwaZulu-Natal and Western Cape provinces are using the AGOA benefits. Clothing exports to the United States jumped from under one billion U.S. dollars to eight billion U.S. dollars last year. While currency declines in South Africa explained some of the almost 800 percent increase, there is no doubt that preferential access can help emerging economies in Africa which have some export capacity.

It is one of 22 countries -- 36 are eligible -- with the infrastructure, resource and skills base to make use of AGOA. Kenya, Lesotho, Madagascar, Mauritius, Swaziland and South Africa are the top six beneficiaries of the preferential trade agreement with the United States.

"I call on the U.S. congress to extend AGOA beyond 2008," said Bush in Washington last month. He added, "We must extend AGOA to give businesses the confidence to make long-term investments in Africa."

This week, Bush told countries he visited that AGOA would be extended.

Viewed through such a prism, the glass is half-full. But focus on AGOA from the south and the picture skews.

First of all, say critics, poor countries cannot trade their way out of trouble. ."..we are convinced that trade between unequal partners cannot be the sole answer to Africa's development," said Leon Spencer, executive director of the Washington Office on Africa at a U.S. Congress hearing last month.

In addition, Spencer pointed out that exporting to the United States was complex and required more trade-related aid to enable more African businesses to take advantage of its benefits.

Leading British charity, Oxfam also criticized the U.S.'s contradictory trade policies in Africa: while AGOA is opening markets, America's domestic subsidies effectively close doors not only to the United States, but also to secondary markets.

"Non-competitive U.S. producers battle unfairly with small farmers to produce items such as maize, rice, poultry, cotton for the world market," wrote Irungu Houghton and Shehnilla Mohamed in the Mail&Guardian newspaper in Johannesburg last week.

They added: "The dumping of subsidized (U.S.) cotton has led to the loss of earnings of up to $250 million to West African economies."