The trip, which featured stops in Senegal, South Africa,
and Tanzania, aimed to highlight Washington’s growing interest at developing
deeper economic ties with the region. Africa is currently home to six of the
ten fastest growing economies in the past decade, and US trade with the
continent amounts to more than US$7 billion.
AGOA renewal, East Africa trade
In Tanzania, Obama declared his support for the renewal
of the African Growth and Opportunity Act (AGOA), a preferential scheme
launched in 2000 that is set to expire in 2015. The AGOA programme
allows for nearly all goods from eligible African countries to enter the US
duty-free.
Trade and energy topped the agenda during US President
Barack Obama’s visit to Africa in early July, with the announcement of various
initiatives aimed at doubling electricity access in the sub-Saharan region,
facilitating intra- and inter-regional trade, and combating illegal wildlife
trafficking.
Many African countries already benefit from duty-free
entry for some of their products under Washington’s Generalized System of
Preferences (GSP). Sub-Saharan countries that qualify for the GSP and also meet
AGOA’s eligibility criteria, however, can have additional products fall under
that list.
According to the Office of the US Trade Representative,
over 93 percent of imports from AGOA-eligible countries entered the US
duty-free under either AGOA, GSP, or zero-duty most favoured nation (MFN) rates. AGOA’s non-petroleum exports
more than tripled from about US$1.2 billion to US$4.5 billion between 2001 and
2011.
Continuing AGOA past 2015 will require Congressional
approval, and would likely be paired with an expansion of the list of
participating countries - currently at 37 - and the inclusion of smaller
businesses in order to make a deeper impact in the region.
Along with renewing the legislation, Obama said,
Washington will also need to make decisions on how to make the scheme more
effective. “Today the vast majority of our trade with Africa is with just three
countries - South Africa, Nigeria, and Angola,” he noted.
The US President also announced the Trade Africa
initiative, which among other goals aims to facilitate and deepen trade within
the East African Community (EAC), as well as increase EAC exports to the US.
The five states of the regional group are Burundi, Kenya, Rwanda, Tanzania, and
Uganda.
Notably, Obama was accompanied on his Africa visit by
newly-minted US Trade Representative Mike Froman, in
what marked the official’s first overseas trip in his new role. Froman is also scheduled to host the annual AGOA forum next
month in Addis Ababa, Ethiopia.
Doubling electricity access
During his trip, Obama also announced the Power Africa
scheme, a US$7 billion initiative aimed at doubling access to electricity in
sub-Saharan Africa. The plan would initially involve six partner countries,
with the goal of increasing electricity access by at least 20 million new
households and commercial entities, according to a White House factsheet.
Currently over two-thirds of the population of
sub-Saharan Africa lack electricity, with that number reaching 85 percent in
rural areas. The Obama Administration initiative would focus on developing
geothermal, hydro, wind, and solar energy, along with using the region’s oil
and gas reserves.
The plan would also build upon private sector
investments, with these partners already having contributed US$9 billion toward
the generation of new electricity.
US and China Spar:
Analysts have been quick to question whether the Obama
trip was a sign of Washington trying to counter - or at least match - Beijing’s
own influence in the fast-growing region. Xi Jinping
already visited the continent in March during his first overseas trip as
China’s new Premier, and the Asian economy recently surpassed the United States
as sub-Saharan Africa’s largest trading partner.
China has come under scrutiny in recent years over concern
that its investment strategies could potentially be stifling African countries’
own efforts to foster their domestic industries.