Africa’s civil society gangs up against trade act

by Lewis Machipisa

Harare, 11 Oct (IPS) - African civil society has ganged up to urge African countries not to sign the African Growth and Opportunity Act (AGOA), which was signed into United States law in May 2000 as part of the US Trade and Development Act.

The US government has sent letters to African governments asking them to express interest in being considered for the AGOA. But civil society groups, in a campaign alert on the AGOA, have been busy making representations to governments advising them against joining.

According to the alert passed on by the Ghana-based Africa Trade Network (ATN), the Act purports to grant certain benefits to sub-Saharan African economies if African governments enact certain domestic laws and pursue certain measures.

“African governments must not pursue those measures and laws. If they do, they will be accepting all the unfair measures that exist in the World Trade Organisation’s (WTO) rules that they are now struggling to change,” reads the alert. ATN claims that the US is one of the major powers blocking efforts to change these unfair measures. In addition, the group adds, African countries will be giving in to the new issues that the US and other major powers want to introduce into the WTO and to which African and other developing countries are opposed.

“All this will be in exchange for very little, because the benefits that the Act offers are illusory.”

Concern has been expressed from various quarters about the dangers posed by the Act. The OAU Conference of African Ministers of Trade, meeting in Cairo last September, cautioned African countries against rushing to join the Act in view of the real danger that the Act will undermine ongoing African economic initiatives.

The most publicised benefit of the Act is that it offers duty- and quota-free access to African products in the US market.”This is dubious, because the American government will grant access only to goods that it decides may not negatively affect American producers.” For example, they note, coffee, sugar and other products of economic benefit are not covered.

In the particular case of textiles, the Act is criticised for wanting to promote the use of American raw materials as against African raw materials in the textile products exported to the US. In effect, only those products and apparel using fabric and yarns produced from America will have easy access to the US market.

“When President Clinton signed the US Trade and Development Act in May 2000, he declared that the Act will be good for the United States, good for Africa, good for Central America and the Caribbean,” says the Accra-based ATN’s Tetteh Hormeku.

In reality, however, warns Hormeku, the main beneficiary of the Act will be the United States.

“As far as Africa is concerned, the effect of the Act will be to grant American companies and producers better and more protected access to African economies and markets, while undermining the ability of African countries to pursue their own developmental priorities,” he says.

“Above all it will serve to bind African countries to the very rules of international trade which these countries are struggling to escape in the World Trade Organisation.”

While in the main, the Act offers apparently better access for African products to the US market and support for and promotion of US investment in Africa, as well as economic relations with African countries, Hormeku argues that in real terms, the benefits of these measures are slim.

“But in exchange for these, the Act requires African countries ... to undertake even more sweeping liberalisation of their economies.”

According to the Act, an eligible country must have established or show progress in establishing and enforcing a range of measures, including a market-based economy that protects private property rights, incorporates an open rules-based trading system and minimises government interference in the economy through measures such as price controls.

It also calls for the removal of subsidies and government ownership of economic assets, and elimination of barriers to US trade and investment, including the provision of national treatment (under which American firms are to be given equal treatment to that accorded to local firms) and measures to create a conducive environment for domestic and foreign firms, and the protection of intellectual property.

According to Hormeku, some of these requirements are contained in the WTO agreements which African governments have found to be to their disadvantage and are struggling to change.

Other requirements, like labour standards and investment, form part of the new issues which the US has been trying to promote in the WTO, against the wishes of African and other developing countries.

The civil society group warns that by making these requirements a conditionality for some supposed benefits, the AGOA sets a trap for African governments to concede to conditions that the US government is having difficulty achieving in the WTO.

“The AGOA will also set African countries against each other. It proposes the establishment of free-trade areas. These, together with other so-called supportive measures for African economies, are aimed only at ‘growth-oriented’ economies.

“A few countries will be selected, and the poorer ones left alone. Above all, as noted by the Cairo Conference of African Ministers of Trade, this will simply undermine regional economic co-operation efforts by African countries.”

“In effect, the free-trade area project seeks a privileged relationship between the US and enclaves of successful African economies, constructing corridors of profitable investment across Africa for American business,” says Hormeku.

Hormeku sees concerted international efforts to defraud Africa. “Europe has forced a similar structure on its African partners in the new ACP-EU Partnership Agreement, whereby starting 2002, Europe will enter into negotiations for free-trade agreement with selections of Africa’s economies in groupings according to economic strength.”

Hormeku says the motivation for American policy is shaped by competition with Europe and other trading blocs.

“While some of the measures may bring benefits like increased revenue, jobs and the like, they risk perpetuating the skewed and fragmented nature of African production and market structures,” he says.

“Mining, for instance, has long been acknowledged as one area where increased activity does not by nature generate spillover linkages with other sectors of the economy in terms of transfer of technology and secondary production.” .

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