No Free Rides

Briefing reporters aboard Air Force One en route from Johannesburg to Dar es Salaam last week, Mike Froman, President Obama’s new US Trade Representative (USTR), talked about the difficulty of transporting goods between Kenya and Rwanda.

“Right now, a product that comes in through the port of Mombasa and wants to make its way to Kigali, you run into 47 road blocks,” he said, according to the White House transcript. “On average, it takes a month…When you get to the border, trucks will wait for oftentimes days, cross into the next country and face another border crossing with a different customs system.”

Mr Froman was explaining his office’s efforts, rebranded as Trade Africa for the Obama trip, to promote regional integration starting with the five-member East African Community. Unless it became easier and cheaper to get their goods to market, he said, few African countries would ever benefit fully from duty free access to the US under the African Growth and Opportunity Act (AGOA).

But why, asked one of the reporters, go to all the trouble of clearing the roadblocks if all it did was make life easier for America’s Chinese competition?

The question, which Mr Froman did not dignify with an answer, was a good, if extreme, example of the narrative underlying much of the coverage and analysis of Mr Obama’s trip – namely that the whole exercise was driven by Washington’s dread of China stealing a march in a new scramble for Africa.

Inasmuch as there is such a scramble, Mr Obama emphatically welcomed it at every opportunity. “Everybody come on down,” he said, mimicking the schtick of a TV game show host. Or as his USTR put it, “having China involved here and others involved here — Brazil, India, Turkey, others — is a very positive thing. So this is not a zero-sum game.”

The administration is not overly worried that it has been overtaken by China as the region’s number one trading partner. It saw this as largely an artifact of growing US energy independence, said Mr Froman. This year through May, US oil imports from Africa were down 29 per cent on the same period last year.

Deborah Brautigam, a leading US China-in-Africa scholar, took Mr Obama to task in her blog for saying at his University of Johannesburg town hall “I want to make sure that as countries come to Africa, that it’s benefiting Africans…If there’s going to be manufacturing taking place of raw materials, locate some of those plants here in Africa.”

She saw this as an unwarranted dig at China, which, she said, was making significant investments in African manufacturing. Hers may be an overly touchy reading of the president’s words. Mr Obama simply wants anyone who invests in Africa to be sensitive to the continent’s need to move up the value chain.

He also wants a level playing field for investors and exporters from wherever they hail.

For South Africa, an essential take-away from his visit is that as hard as the US administration will work to have Congress renew AGOA before it expires in 2015, SA’s continued enjoyment of AGOA benefits is subject to further discussion.

The president “does want to renew AGOA,” Mr Froman said on Air Force One, “but with regard to South Africa…we also have to take into account how things have changed in the global economy.” In other words, South Africa, proud member of the BRICS, and by far the largest non-oil-exporting beneficiary of AGOA, cannot count on a free ride when AGOA is renewed.

American firms have repeatedly complained that the SA-EU free trade agreement discriminates against them. They ask why the US should unilaterally extend duty-free access to nearly all SA products under AGOA while SA, under its pact with the EU, imposes lower tariffs on many European products than it does on competing American ones.

The duty SA charges on US goods is, on average, 12 per cent higher than on EU goods, according to USTR’s 2013 National Trade Estimate Report on Foreign Trade Barriers. Some EU products have a 50 per cent tariff advantage. American makers of cosmetics, plastics, textiles, farm machinery, trucks and guns feel hardly done by.

They have clout in Washington.As does Senator Chris Coons, chairman of the Senate Africa subcommittee, whose knowledge and love of SA surpasses those of all who have ever held his position. His state, Delaware, is the chicken capital of America and its chicken has been shut out of SA. About that he has no choice but to care deeply.

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