Briefing on the AGOA Forum
Assistant Secretary, Bureau of African Affairs
At this time, I’m going to turn it over to Ambassador Marantis. Each of our speakers will make a brief statement, and then we’ll open it up for questions. Thank you.
AMBASSADOR MARANTIS: Hi, everybody. This is much more snazzy than what we do at USCR in terms of room. We’re really excited to be here today and talk to you about the upcoming AGOA Forum, which, as you know, will take place in Lusaka, Zambia next Thursday and Friday. The AGOA Forum, as many of you know who have been involved in it before, is an amazing opportunity to gather together U.S. and African senior officials to really take stock of where we’re going on our trade and investment relationship.
As you all know, the U.S.-Africa trade and investment relationship rests on two very important pillars. The first one is AGOA, which has provided incredible access for exporters from Africa to take advantage of the many opportunities in our huge consumer market. AGOA opens up the U.S. markets at 98 percent of Africa’s products, and it’s – there have been success story after success story of exporters and the employees that work for those exporters that have been able to take advantage and really build lives on the basis of the opportunities that have been provided under AGOA for products to be used here in the United States.
AGOA, as many of you know, expires in 2015, and there are key steps that we need to take over the course of the short term and the long term as we look towards 2015. Two major things that we hope to accomplish in the very near future, which we will talk to our African partners about next week, is there’s a provision of AGOA called third country fabric that expires in 2012. And that’s a provision that allows many African countries to use fabric from third countries in order to export apparel products to the United States. It’s been a really important provision in helping to grow the apparel sector in many African countries, which, as you know, the apparel – textile and apparel sector is oftentimes the foundation – foundational sector that really helps to boost economic development and leads to growth in other sectors. That provision expires in 2012. We are committed to working with Congress to getting that renewed as quickly as possible and hope to do so as early as this summer in order to provide the predictability and stability that investors need in both the United States and Africa to ensure a smooth flow of textile and apparel trade from Africa to the United States.
Another really important provision that we’re working on as part of AGOA this summer is to ensure that when South Sudan becomes an independent country that it will be able to be eligible for AGOA benefits. That will require Congress to add South Sudan to the list of AGOA-eligible countries. And so those are two very important things that we hope to do in the course of the next upcoming weeks and months in order to make sure that AGOA works as well as it can and to reaffirm our important commitment to Africa under AGOA.
We also plan to talk to our African counterparts next week about AGOA generally – what have we learned from the past 11 years of AGOA, what’s worked well, what hasn’t worked well. And we’re going to need to really have a very in-depth and candid conversation as we look towards a seamless renewal of AGOA when it expires in 2015. So that’s one pillar of our relationship, our trade and investment relationship with Africa that we will have extensive conversations next week in Lusaka.
The other pillar, which is as important, is trade capacity building. And AGOA opens the door to the U.S. economy. But with an open door, exporters need help in being able to avail themselves of the opportunities that AGOA provides. That’s why trade capacity building is so important. We – through USAID, we fund four hubs around Sub-Saharan Africa, and these – trade hubs is what they’re called – are what help African exporters learn how to take advantage of AGOA. They learn how to market their products in the United States, they learn what types of products are most commercially viable in the United States. And through the work of these hubs, we’ve developed – have been able to work very closely with various countries throughout the continent to really develop some very interesting and exciting products that have benefited from AGOA.
The challenge that we face now is how to take what we’ve learned in terms of successes and multiply them. One of the downsides or one of the challenges of AGOA is it’s not used as much as I think either Africa would like or we would like. And so the challenge that we have – and this is going to be a fundamental element of our discussions next week – is how can we work together bilaterally with our African partners as well as regionally through the regional economic communities to help increase the diversification of what Africa sends to the United States under AGOA.
So we’re really excited about the forum next week. It’s an opportunity for Secretary Clinton and Ambassador Kirk to meet with their counterparts. It’s an opportunity for me, for Ambassador Carson, for all of the agencies that are going to be there, to work with our counterparts in various – and our various African partners – to really see how we can take the trade and investment relationship that we’ve developed under AGOA to the next level, and that’s our goal next week, and we’re very excited about it. So with that, let me turn it over to Ambassador Carson.
ASSISTANT SECRETARY CARSON: Demetrios, thank you. Ladies and gentlemen, thank you very much. We’re here this afternoon to talk about the AGOA Forum, which will take place in Lusaka, Zambia next week. But before I do that, I would like to take note of some of my recent travels.
I returned Monday from Nigeria, where I had the honor to lead the presidential delegation to the inauguration of President Goodluck Jonathan, Nigeria’s new president. That event signified substantial progress in Nigeria’s democratic development and a new beginning for the Nigerian people. We in Washington look forward to working with President Jonathan and the people of Nigeria to help them build on the 2011 elections to create a just, strong, and more prosperous future for all Nigerians.
I would also like to draw your attention to the current situation in Southern Sudan. The United States condemns the offensive operations being undertaken by the Sudanese Armed Forces in and around Abyei town and the presidential decree dissolving the Abyei administration. The actions being taken by the Government of Sudan are blatant violations of the Comprehensive Peace Agreement of January 2005, and they threaten to undermine the mutual commitment of the CPA parties to avoid returning to war. We call on President Bashir and First Vice President Salva Kiir to meet immediately and to agree on a way forward that restores calm, upholds the CPA, and recommits both sides to negotiated political settlements on the future of Abyei.
Let me now turn to AGOA. AGOA is an important part of the overall engagement of the United States with Africa. We seek to help the nations of Sub-Saharan Africa become important partners in the global economy, and the trade opportunities offered under AGOA provide the means to help that happen. Just as Africa can profit from taking further advantage of AGOA opportunities, stronger economies and markets in Africa offer opportunities for American companies and workers as well.
In 2010, AGOA-eligible countries exported some $44 billion in products to the United States, although petroleum products continue to account for the largest portion of AGOA imports with some 91 percent of the share of overall AGOA imports. The program has also helped promote new non-traditional and value-added exports from Africa. This includes products such as apparel, footwear, processed agricultural products, and other manufactured goods. Increased trade is one of the fastest ways to expand economic growth, spur development, and reduce poverty across Africa. Building effective regional trade relationships promotes overall economic growth and contribute to increased U.S.-African trade.
AGOA plays an important role in the Administration’s priorities in Africa and helps support regional economic integration and provides incentives for beneficiary countries to improve their overall investment climates, reduce corruption, improve infrastructure, and harmonize trade standards to help them become more competitive in the global marketplace. We strongly support AGOA and look forward to working with African countries to strengthen the AGOA relationship between the United States and Africa.
MR. FINE: Since we’re here to talk about AGOA and trade and investment between the U.S. and Africa, I brought some – an import, an African import with me. I personally imported this. (Laughter.)
My name’s Patrick Fine. I’m the vice president for Compact Operations at the Millennium Challenge Corporation, the MCC. I want to say a word about the MCC and one of the resources that the U.S. Government has for supporting increased trade and investment in Africa with the U.S. and with other parts of the world.
For those of you who aren’t familiar with the MCC, we are a development agency of the U.S. Government that focuses on reducing poverty through economic growth, so our focus is very pertinent to the objectives of AGOA. We provide development assistance through a non-traditional approach, and by non-traditional, what I mean is we have a specific focus – economic growth. We have a selective process where countries have to qualify in order to be eligible for MCC financing. That process is rigorous and it’s done by – through independent third-party indices. We have – and that selection process creates very powerful incentives for governments to improve their policy performance, and that – I’ll say a word about that, because that’s very important to creating the environment that supports increased trade and investment.
We put a very strong emphasis on country ownership. So countries are responsible for preparing investment ideas and submitting them to us once they’re deemed eligible, and for implementing the programs themselves. That also creates a powerful incentive for good performance in carrying out the programs.
Now, where our programs support the objectives of AGOA and the increasing international trade and investment are, first, we work with well-governed, poor countries. The majority of countries that are in – we have a global portfolio, we work with countries around the world, but the majority of the countries that we work with, over half are in Africa and two-thirds of our total financing is in Africa. African governments – as I said, we put a high priority on country ownership, so African governments identify the investments themselves; investments that will reduce the constraints to economic growth. Not surprisingly, most of the investments that they’ve identified are investments to build the infrastructure and the capacity to allow them to export more, to grow their economies through investment and the exporting.
So there are two principal ways where MCC serves as a very powerful resource for supporting the objectives of AGOA. One is through the incentives that I mentioned, that create powerful incentives for good policy performance to create the business environments that allow businesses to flourish and allow African countries to provide the kind of environment that attracts private investment so that it can be responsive to the incentives that are created by AGOA for exporting to the U.S.
An example from Cape Verde, which was the first country we had a compact with, is that their – Cape Verde is the second or third best performer in terms of business environment in Africa, and much of the reforms that they’ve undertaken were specifically done to qualify for MCC assistance. So you can see it’s a strong influence to getting the kind of environment that supports business activity.
Aside from the incentives, the way that African countries have chosen to use MCC financing is in large part to invest in infrastructure that supports exporting and supports investment. For example, African nations are using MCC financing to build ports in Benin and in Cape Verde, to build an airport in Mali, to build roads in Tanzania. Those investments provide the basis within the country for business to grow, for products to move, and for the countries themselves to have the capacity to take advantage of the incentives that are provided for under AGOA. It works very well in combination with other parts of the U.S. Government, with our interagency partners, with USAID. Ambassador Marantis mentioned the trade capacity work that USAID has been doing.
Some MCC work also focuses on trade capacity, for example, on customs work, on justice – there’s some justice sector work. But it’s a good match between the building out the infrastructure so that countries have the wherewithal for their businesses to be responsive with the work that USTR and USAID and the State Department are doing. Thank you.
Oh, let me say one more – sorry. I always think of one more thing to say. One more thing to say is that we’re particularly excited about this AGOA being in Zambia, because we’re in the process of developing a program with Zambia right now. We expect that program to be finalized within this calendar year, and our CEO, Daniel Yohannes, is going to be going out to the AGOA Forum and he’ll be participating there.
MS. FULTON: Thank you, Mr. Fine. With that, I’ll invite all of our speakers back to the podium, then we’ll open up for your questions.
QUESTION: Can I just ask one – I do have an AGOA-related question, but I wanted to – since Assistant Secretary Carson brought up the other two issues, can I just ask a very brief one on your comments on Southern Sudan?
One, the White – John Brennan was in Khartoum today meeting with Sudanese officials. Can we assume that the message that you delivered to us right here was the same message that he delivered to – or at least part of the same message that he delivered to Sudanese officials on the condemnation of the invasion of Abyei and the demand for – or the call for an immediate meeting between Bashir and Kiir?
MR. CARSON: Thank you very much. I can confirm that John Brennan was in Sudan. He is a part of the same administration; the message is uniform throughout the Administration. We are deeply concerned about the situation in Abyei and in Southern Sudan. We want to do as much as we possibly can between now and July 9 to ensure that the Comprehensive Peace Agreement is fully complied with. We want to see a withdrawal of Sudanese troops from the areas of Abyei and we are looking for both senior leaders to meet together to discuss how to defuse tensions between the two parties and to fully implement the remaining items that have to be complied with to complete the CPA. But the message is the same and is consistent.
QUESTION: Okay. And then just the last thing on that is that the other thing the White House statement said was that he was going to talk to them about the review of the State Sponsor’s designation. And I’m just wondering is this a – have the Sudanese been told or are you – will the situation in Abyei have any effect on the review or possibly taking them off the list?
ASSISTANT SECRETARY CARSON: The review and the basis for taking them off of the list are defined legislatively. And that will be the most important guidepost. They have to meet the legislative requirements for being taken off of SST, but there is no doubt that the events of the last several weeks do undermine people’s confidence in the commitment to follow through on the roadmap that was laid out some months ago.
QUESTION: Can I follow up on that one? I was just wondering, in the past the statements have been relatively evenhanded, the message being both to Khartoum and to Juba that they need to follow and uphold the basic precepts of the CPA. Why isn’t Brennan going to Juba? Are you now assigning more blame for the situation on Khartoum?
And secondly, Khartoum itself has said, I think on May 28th, that military operations in Abyei were at a halt, but your statement had it in the present tense. What’s our understanding of what’s going on now?
ASSISTANT SECRETARY CARSON: Mr. Brennan is in Khartoum because that is the capital of Sudan. He went to talk primarily to leaders, among other things, about SST. That is an issue that has to be resolved in Khartoum and not in Juba. But it did offer an opportunity for him to have complete discussions with the Sudanese about our policy issues and concerns.
I think I’m going to – if I could, say let’s --
QUESTION: Can I ask my AGOA question now?
MS. FULTON: Yes. (Laughter.)
ASSISTANT SECRETARY CARSON: Yeah. Okay. I think we --
QUESTION: One of you mentioned MCC and roads and Tanzania specifically. And I’m wondering if any of you can answer does the U.S. have a position on the Tanzanian Government’s plan to build this trans-Serengeti highway?
MR. FINE: We’re not – I mean, we’re not involved in that. The MCC’s not involved in that at all.
ASSISTANT SECRETARY CARSON: Let me say that we are fully aware of the concerns that have been raised in this country and in other countries about the environmental impact that the trans-Serengeti road will have on the very large, spectacular, and almost unique migration of animals from the Serengeti up to the game parks in Kenya. We have discussed this issue with senior leaders of the Tanzanian Government. When I was last in Dar es Salaam approximately five weeks ago, I raised this issue both with the president of Tanzania as well as the foreign minister. They are clearly aware of the concerns and are trying to address them in the most appropriate fashion. They are – they know the value of the wildlife, the importance of the Serengeti. They have no desire to destroy that, but they also are looking for ways to stimulate economic development in other parts of the country. But we do discuss it with them. It is an issue that’s been brought to our attention, and we have, in fact, brought it to the attention of the Tanzanian Government.
QUESTION: Do you expect Secretary Clinton to raise it with President Kikwete and others when she’s there in ten days or whatever it is?
ASSISTANT SECRETARY CARSON: Let me just say that Secretary Clinton is planning to travel to Dar es Salaam immediately after the end of the AGOA Forum in Lusaka. We are looking forward to that trip, Secretary Clinton is looking forward to that trip. Tanzania is, as my colleagues have probably said, Patrick and others, is a model development partner. It is a strong multi-party democratic state. It is one of our strongest partners – yes, sir – it is one of our strongest partners in the development field, and we are pleased to be going there. This is a friend of the United States and a stable partner.
MS. FULTON: Our speakers’ time is a bit limited, so I’d like to bring it back to AGOA-related questions while we (inaudible).
QUESTION: I have an AGOA-related question. Looking back over Secretary Clinton’s comments about AGOA over the past couple of years, it seems like she’s had a fairly consistent message, which is that yes, this is a great thing but Africa’s got to do more to reduce its own trade barriers, fight corruption, and figure out ways to diversify. So as you’ve already mentioned, 90 plus percent of their exports to the U.S. are petroleum. What evidence is there that they are doing any of these things? And what – I mean, you’re talking about extending AGOA in 2015. Is it just going to be more of the same, you’ve got to do this and it never happens? What’s the lever whereby this is actually going to happen?
AMBASSADOR MARANTIS: We’ve been – and Ambassador Carson will have some comments as well. I mean, we’ve been working very closely with our African partners on trying to, for instance, spur regional economic integration, which is one of the key ways that Africa will help spur its own economic development. We have work underway with the East African Community, with COMESA, and with others, to help provide assistance to knock down internal barriers. And there are some really interesting statistics – I don’t remember them off the top of my head – on if you send a container from Dubai to Mombasa, it costs $1,000, and then it costs $3,000 to send the same container from Mombasa to Kampala. I mean, those are the kinds of things that we want to work and are working on with Africa to help, particularly as the EAC integrates, to create a more regional whole where the customs barriers that have so far impeded trade go down. That’s good for U.S. exporters exporting to Africa because they’re able to export to a more seamless market. It also will exponentially increase the development prospects of Africa as the regional economic communities really continue to make progress.
MR. FINE: Let me just say a word. The – first, it’s difficult to talk about Africa as a whole. There are many countries in Africa that have made tremendous progress in improving the business environment, improving their policy environment, in better managing their own finances. The kind of customs barriers that Ambassador Marantis is talking about, there’s been a tremendous change. If you look in East Africa, for example, it used to be at the Kenya-Uganda border, to cross that border, for a truck to cross that border, the truck driver would have to go to seven different offices and in each office fill out papers in triplicate or quin-triplicate and have them processed separately, and it took maybe half a day to do that. Now there’s – it’s – you go to one office, you fill out the papers, you go.
So it’s still not perfect. There are still delays at those borders, but they’re far less than they used to be. So there’s been real progress, and that progress you can see reflected in the growth of African countries. The GDP growth or the economic growth in African – in many African countries has been quite high. And you see increased trade and increased regional trade. In West Africa, the level of increased regional trade has gone up substantially in the last 10 years. So I – there is real progress. AGOA contributes to that because countries want to be eligible, and so do programs like the MCC that set up specific policy targets that countries have to meet in order to qualify.
QUESTION: Okay. Maybe just one little quick follow-up. I mean, just to put it another way, is the Secretary going to have a different message for AGOA this time around or is it going to be the same message that we’ve heard the past two years running? Is there something new to be said about AGOA at this stage?
AMBASSADOR MARANTIS: I mean, I can speak for Ambassador Kirk because at USTR and I’m in it, and it’s a consistent message throughout the Administration. I mean, one of the key things that we really need to focus on in this AGOA forum is what’s worked well and what are the – what have been the successes, what are the challenges, and what do we learn from them as we together in this government work with Congress and work with stakeholders to ensure a seamless renewal in 2015? There are a lot of questions that have come up over the course of the past 10 years about the eligibility criteria in AGOA, how much is AGOA helping to promote regional economic integration, questions that you raised about petroleum and other things. We need to take stock of those and think about those in partnership with the beneficiary countries in Sub-Saharan Africa. And that’s one of, I think, the key goals for both Ambassador Kirk and Secretary Clinton, is to really foster and engage in a really candid and honest discussion about what have we learned in the 10 years – what’s worked, what hasn’t worked well, and how can we make AGOA better?
QUESTION: How long an extension of the third-country fabric provision are you seeking?
AMBASSADOR MARANTIS: So it expires right now in 2012, and what we’re seeking is a three-year extension until 2015, which is when the current AGOA program is set to expire.
QUESTION: Mr. Carson, when you think about the renewal of AGOA, how do you factor in the question of China as a rival for African raw materials, for African labor, for its own trade relationships with African countries in – I mean, we’ve already seen it, particularly in West Africa, and it doesn’t seem that Beijing is going to be backing off from looking to Africa as a source to supply its own economy. (Laughter.)
ASSISTANT SECRETARY CARSON: There sure are. And let me just say, if I could follow up on Ambassador Marantis’s response to the previous question and also what’s new, one of the things that we are doing is not going out and simply talking to and lecturing to Africans about trade. AGOA provides an opportunity for us to hear from Africans, as Ambassador Marantis pointed out, what they’ve learned as well as what we’ve learned. This is a discussion, it’s a dialogue, it’s a conference, and we want to be able to benefit from their observations so that our observations and our actions are more meaningful moving ahead.
We want to see Africa become a larger, more significant, and active partner in the global economic community. We think that the capacity in Africa to do so is there. Despite its large petroleum exports and mineral exports, Africa today still accounts for only about 1.5 percent of global trade. We see Africa in the years to come as a economic powerhouse, very much the way we have seen Latin America transformed as well. Our desire is to ensure that Africa can, in fact, grow economically. If it grows economically, it is also going to produce greater stability for Africa. Greater stability means fewer conflicts and a greater contribution to their people and to the world community. Our desire is to see a stronger Africa economically, and I think AGOA and MCC help to provide that foundation.
China question: China is, in fact, a strong and aggressive economic competitor in Africa. It is clearly concerned about trying to acquire for its own robust economic engine significant oil, mineral, and natural resources to help feed its industrial growth. We see that not as a threat to us but simply as strong, aggressive, economic competition. And what we say to Africa about that is that they should, in fact, hold China to the same high standards that they hold American, German, French, Spanish, Japanese, or other developed economies to when they’re doing business.
MS. FULTON: I think we have time for maybe one more question. Right here.
QUESTION: I understand there’ll be some kind of pre-conference consultations at a very high level. I wonder if you could talk about that, and do you think that those consultations will sort of set the agenda at the meeting itself?
AMBASSADOR MARANTIS: So the forum – the ministerial-level events at the forum start next Thursday and Friday. The day before, there is a day of interaction between the government and the private sector, and the Africans have their own consultative group where they have sort of a high-level discussion amongst themselves as they prepare for the ministerial discussions at the AGOA forum. So there will be a high-level – and that is usually amongst the African ministers. From time to time, we will participate in certain aspects of it, but that’s really more for the African ministers to sort of consolidate their views as they meet with Secretary Clinton and Ambassador Kirk.
MS. FULTON: Okay. Thank you very much, everyone. We appreciate your time. Thank you.