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USTR Lighthizer Says African Free Trade Agreement a Trump Goal

Trade in goods between the U.S. and sub-Saharan Africa increased 5.8% percent to $39 billion between 2015 and 2017, and apparel and textiles played a key role, according to a report delivered to Congress last week by the Office of the U.S. Trade Representative (USTR).

USTR Robert Lighthizer said with the report and next week’s Africa Growth & Opportunity Act (AGOA) Forum, “The Trump Administration is continuing to build on AGOA’s success by strengthening bilateral trade relationships in Sub-Saharan Africa, with the goal of establishing a free trade agreement that could serve as a model for developing countries. By reducing barriers to trade, we create more opportunity, jobs and wealth for workers in both the United States and Africa.”

Total U.S. goods imports from Sub-Saharan African countries under AGOA, including the Generalized System of Preference program, totaled $13.8 billion in 2017 compared to $9.3 billion in 2015. The report, which examines developments in AGOA over the past two years, showed that Sub-Saharan African non-oil exports to the U.S. under AGOA equaled $4.3 billion in 2017, up from $4.1 billion in 2015, mainly due to increases in exports under AGOA in apparel, footwear, iron and steel, fruits and nuts, cocoa paste and cocoa powder.

Forty countries are currently eligible for AGOA, including The Gambia and The Kingdom of eSwatini (formerly Swaziland), countries that regained their AGOA beneficiary status as of Jan. 1. In order to participate in AGOA, countries must establish or make continual progress toward establishing a market-based economy, the rule of law, political pluralism and the right to due process. In addition, countries must eliminate barriers to U.S. trade and investment, enact policies to reduce poverty, combat corruption, and protect human rights.

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“By providing new market opportunities for African exports, AGOA has helped bolster African economic growth and alleviate poverty on the continent,” the USTR report states. “Additionally, AGOA has helped create a more conducive environment for American investment and business interests as African markets continue to expand.”

In the section of the report dubbed “AGOA Success Stories,” the apparel sector was cited as being targeted by many AGOA beneficiary countries that have taken advantage of the pact’s tariff preferences and liberal rules of origin for apparel. Kenya, Lesotho, Madagascar and Mauritius have been the leading exporters of apparel under AGOA, accounting for almost 90 percent of AGOA apparel exports in 2017.

“Increased apparel exports under AGOA have also led to improved productivity and employment opportunities,” the report said. “For instance, in Kenya, UAL Apparel Factory is a leading exporter that supplies many large retail chains, including Levi Strauss and H&M. Since the extension of AGOA in 2015, UAL has added thousands of jobs and currently employs nearly 10,000 Kenyans. Overall, 40,000 Kenyans are employed in the apparel export industry.”

Since 2016, the U.S. Agency for International Development’s (USAID) Trade and Investment Hubs in Africa have facilitated more than $140 million in U.S. investment across a range of key sectors, including agribusiness production and distribution, apparel and light manufacturing, as well as financial and technology services, supporting nearly 50,000 jobs in Sub-Saharan Africa, the report noted.

Mauritius has one of the most successful and competitive economies in Africa, with a gross domestic product (GDP) of $12.6 billion and per capita GDP over $9,700, USTR said. The economy grew by 3.8 percent in 2017. Its exports to the United States, under AGOA, amounted to $193 million in 2016, about 99 percent of which were in textiles and apparel.

The cotton growing and cultivating sector has also grown under AGOA. The C-4 Cotton Partnership (C4CP) was created by USAID to increase food security and incomes for cotton farmers in targeted areas of Benin, Burkina Faso, Chad and Mali, known as the four cotton-producing countries, or “C-4.”

USTR noted that C4CP was implemented in 2014 and runs through this year. The program is aimed at raising incomes of cotton producers and processors by introducing competitive and sustainable strategies to boost farm productivity and improve post-harvest processes. The project is meant to forge partnerships with an array of regional and national companies and stakeholders in the value chains for cotton and its rotational crops.

U.S. investment in Sub-Saharan Africa stood at $29 billion in 2016, the latest year for which data was available, down 23 percent compared to $37.5 billion in 2014. The three largest destinations for U.S. investment were Mauritius ($6.7 billion), South Africa ($5.1 billion) and Nigeria ($3.8 billion). Sub-Saharan Africa foreign direct investment in the U.S. stood at $4.2 billion in 2016, up 164 percent compared to $1.6 billion in 2014.

Expanding the U.S.-Africa trade relationship beyond AGOA is the focus of an AGOA Forum to be held in Washington, D.C. on July 11 and 12. The Forum’s 2018 theme is “Forging New Strategies for U.S.-Africa Trade and Investment.”