It takes a coffee exporter in the East African Community 29 days to fill out paperwork, transport the product to a port, clear customs and load it aboard a vessel – twice as long as it takes in Brazil, according to an editorial in Bloomberg.com.
The best strategy for engaging Africa over the long haul is renewal and expansion of the African Growth and Opportunity Act that would help streamline the export process, among other things, for African countries, the editorial says.
Signed by President Bill Clinton in 2000, the agreement allows 40 countries in sub-Saharan Africa to ship products to the U.S. tariff-free.
The Africa trade agreement is a success, according to Bloomberg.com. Since 2001, African exports to the U.S. have grown 500 percent-plus to $54 billion in 2011. The African Coalition for Trade estimates that the pact created up to 1.3 million jobs.
The treaty expires at the end of 2014. Obama should ask Congress to renew it now and to broaden the law’s impact, the editorial says in Bloomberg.com.
Obama could do more to improve trade relations. Trade Africa is one of four initiatives he proposed while in Africa, focusing on an existing regional trade group, known as the East African Community, which includes Burundi, Kenya, Rwanda, Tanzania and Uganda. Trade among them has doubled in five years and their combined output has quadrupled to $80 billion in the last 10, the report says.
U.S. and African officials plan to meet in August in Addis Ababa to assess trade. They should push to drop complex tariffs, needless checkpoints and other customs barriers that impede cross-border trade, the editorial suggests.
Why not push for customs agencies that use common technology and ultimately a single customs authority for the entire region? Or why not think even bigger and open talks over a continent-wide free-trade agreement, like Europe’s early common market?
One problem is that U.S. exporters depend on an array of government agencies for financing, the editorial says. There should be a single investment-finance agency under a unified trade policy. The White House should also ask Congress to give the agency multi-year authorizations so it can better predict its own funding, and the power to make equity investments, something now denied to the Overseas Private Investment Corp., the editorial says.
It is in the U.S.’s interest to increase trade with Africa, not only to boost American exports, but also to promote U.S. values of transparency and the rule of law, according to Bloomberg.com. (It is an added bonus that increased trade would also improve the U.S. position on the continent to compete with China, the world’s other superpower.) It is also in Africa’s interest to increase trade with the U.S., not only to expand its burgeoning middle class, but also to help lift out of poverty the millions of sub-Saharan Africans living on $1.25 a day or less, the editorial says.
If Obama demonstrates long-term commitment and demands fair play and transparency, he could vastly increase the flow of private money to Africa. The lives of millions of people would improve in the bargain.