Ten Recommendations for US-Africa Policy

The following are Manchester Trade’s suggestions to the US Administration and Congress for a proactive economic growth policy towards sub-Saharan Africa (SSA). A new approach is required for the United States to better relate to SSA aspirations. Important too is a need to recover lost ground from China’s increasing dominance of African resources and markets, India’s leadership of African countries in the World Trade Organization (WTO), and European Union (EU) success, through a subtle combination of trade pressure and aid incentives, in negotiating agreements with an increasing number of African countries. Particularly frustrating to US commerce is the discrimination US products face against the EU’s exports in SSA markets. Manchester Trade (MT) argues that the Obama Administration must develop a creative, proactive approach and move away from its reliance on once effective but now largely outdated policies as a way to boost its commercial presence in these emerging markets; and, more importantly, contribute to African growth through the promotion of regional integration.

Manchester Trade urges the US government to complement its current initiatives in agriculture, food security and climate change with an economic growth initiative aimed at unlocking the competitive potential of the fast-emerging SSA markets. MT recommends that the US put its support behind African-led initiatives to regionally integrate. Integration among economies will help overcome the challenges they face and help them to attain the economies of scale required to achieve world-class competitive production. Greater participation in increasingly sophisticated value chains is possible. Through more diverse economies, and greater intra-regional cooperation, Africa can reach a level of global competitiveness attained by Asian and Latin American countries that were in the same situation a few years ago. The US Administration must introduce new trade initiatives, trade capacity-building measures and incentives to American businesses interested in the region to make this potential a reality.

The colonial division of sub-Saharan Africa (SSA) led to the creation of 47 countries, almost all of which are too small to compete in the global economy and subsist at some of the lowest global income levels. A critical ingredient required in overcoming inefficiency and poverty is regional integration. As evidenced by the creation of more effective government institutions, economies of scale in production and infrastructure, and fostering development through the linking of small, land-locked economies, regional integration offers broad advantages.

A consensus is emerging that there needs to be a multi-Committee approach in Congress and an integrated approach from the White House and the development and financing agencies to develop a concerted approach among the key players.

Manchester Trade calls on the US government and Congress to provide a more comprehensive package of development and financing assistance to US-Africa programming initiatives than those that exist today.

RECOMMENDATIONS

Enhance US business opportunities in and with Africa

• Establish a One-Stop Shop. Require the Executive to establish a One-Stop Shop for US investors and traders wanting to do business in sub-Saharan Africa encompassing the Departments of Commerce and State, the US Agengy for International Development (USAID), Overseas Private Investment Corporation (OPIC), US Trade and Development Agency (TDA), the Export-Import Bank (ExIm) and the Millennium Challenge Corporation (MCC).
• Propose China-US cooperation in Africa. Recommend that Secretary of State Clinton promote US coordination with China in developing a joint approach to African development under the Strategic Economic Dialogue mechanism, as part of an increased effort with all donors to develop a concerted, comprehensive and cooperative approach in sub-Saharan Africa.
• Institute investment or export tax credits for Africa. Direct the Administration working with the tax committees to develop tax credits and other incentives for businesses wishing to invest in or export to the African market. It would contribute to current US efforts to double exports as part of the American economic growth and recovery process.
• Institute a Brand Africa Program. Brand Africa as an emerging region complete with opportunities for investment and new market growth through an Executive Directive to all agencies to focus on Africa as part of the global supply chain and as an emerging market for US investments and exports.

Strengthen bilateral trade relations

• Suggest policy alternatives to the EU's Economic Partnership Agreements (EPAs). EPAs should be replaced with a non-coercive multilateral approach which would respect the policy space due poor and vulnerable SSA countries, allow them to develop internal production capacities, reinforce economic integration and not discriminate against US exports.
• Re-examine the African Growth and Opportunity Act (AGOA). Modify AGOA legislation to:
• expand coverage to allow duty-free, quota-free (DFQF) importation of all products, including less sensitive products subject to tariff rate quotas (TRQs); 
• develop more effective and less disruptive sanctions than removal from AGOA to pressure countries to adhere to its eligibility requirements and use AGOA removal only as the last resort;
• ensure AGOA benefits are permanent, including those permitting the use of third country fabrics;
• mandate trade capacity-building efforts and renew the African Global Competitiveness Initiative; and
• suggest the establishment of a joint US-NEPAD African Peer Review Mechanism to develop benchmarks and monitor the success of US trade programs.

Take the lead in multilateral negotiations

• Support SSA Aspirations at the WTO. Work with the AU and the African group to instill enthusiasm for a pro-African growth and integration agenda there. For example, support elimination of obstacles to integration by treating the region as a special economic zone rather than dividing it between least-developed countries (LDCs) and non-LDCs for purposes of DFQF programs and in demands for reciprocity.

Support the development of Regional Economic Communities (RECs)

• Support REC enhancement. Appropriate funds to support RECs and the African Union in their goal of an African Economic Community (AEC) replete with an economic monetary union -- a high priority of the African Global Competitiveness Initiative at USAID -- by renewing and enhancing resources for REC support.
• Introduce a regional component to MCC. Ensure the new mandate for the Millennium Challenge Corporation (MCC) requires a certain percentage of funding for projects on a regional basis or alternative provisions with the same intent.
• Deepen cooperation with the African Union (AU). Develop a proactive policy with the AU to support, inter alia, implementation of the Abuja Treaty for the attainment of the African Economic Group, and in Geneva to assure a mutually beneficial outcome at the Doha Round.