Opinion: Trump’s ‘America First’ Policy An Opportunity For China To Access AGOA, US Markets By Manufacturing In Africa
In his inauguration speech, U.S. President Donald Trump announced his America First policy, an attempt by the world’s richest economy to bring back manufacturing and protect U.S. companies and workers from foreign economic competition.
The main target of the America First policy is China, the world’s second-largest economy and top industrial exporter. China has positioned itself as the world’s factory.
In Africa, there is fear the policy could result in the U.S. repealing or unfavorably modifying the African Growth and Opportunity Act (AGOA) to keep the continent out of the U.S. market.
AGOA allows duty-free access to the U.S. for qualifying sub-Saharan African countries. To qualify, each country must be working to improve its rule of law, human rights, and respect for labor standards.
From Independent Online. Story by Andile Ntingi, CEO and and co-founder of GetBiz, an e-procurement and tender notification service.
I don’t buy the argument that the policy will lead to the scrapping of AGOA, because Africa engages in very little trade with the U.S. and therefore is no threat to U.S. domestic producers and jobs.
I believe AGOA will not be tampered with, but Africa is likely to feel the pinch of the “America First” policy if it is targeted at China, the continent’s largest trading partner.
Not long ago, Africa – which mainly supplies raw materials to China – suffered a big knock from a slowdown in China’s economy. In 2015, the value of African exports to China slumped by 42 percent to $67 billion, from $116 billion in 2014, due to weak global demand for China’s industrial products.
Because China is Africa’s biggest export market, the “America First” policy will hurt Africa because the export-oriented China creates its wealth by exporting manufactured goods to the U.S. and other large Western markets. China can still circumvent Trump’s efforts by relocating some of its manufacturing to Africa to take advantage of AGOA and access the U.S. market through Africa.
It is no secret that African countries have failed to take advantage of AGOA, which gives tariff-free market access to more than 8,000 African products. The aim of AGOA is to help Africa speed up its industrialization and diversify its economies away from raw material extraction, which is vulnerable to wild swings in commodity prices.
But African countries still export largely raw materials to the US, even though they are given preferential access for their manufactured products.
The “America First” policy presents Africans with an opportunity to lobby China to use the continent as a manufacturing export base to the U.S. and other key markets. This could be the classic win-win deal, beneficial to both China and Africa. Africa gets to boost its industrial capacity, while China gets access to the U.S. market via Africa.
Read more at Independent Online.