Expanded Trade Role With Africa Requires ‘Enlightened Aid’

Posted September 3, 2003 at 8:59am

From the war on terrorism to the supply of critical resources — from the campaign against threatening diseases to the opportunities for economic trade and investment — our enlightened self-interest argues for a sustained and bipartisan effort to expand U.S. engagement with Africa’s 54 nations and three-quarters of a billion people.

The Bush administration and other proponents of trade laud its importance as an engine of economic growth in developing countries. They say that an emphasis on trade, as opposed to aid, is the answer to bringing African nations out of the cycle of underdevelopment and dependence.

Most experts accept that trade liberalization will be a central component of a more successful U.S. policy toward Africa. To achieve the full potential of an expanded relationship, however, more enlightened aid and financial policies will be required as well.

In 2002, U.S. exports to Africa exceeded $5.8 billion, while our imports stood at more than $18 billion. Energy imports accounted for a substantial proportion of that current imbalance.

About one-sixth of U.S. oil consumption comes from Africa; and some experts expect that Africa’s share of our oil supply will grow to one-fifth within the next five years. 

From the perspective both of “African development” and of a more balanced export-import relationship, our policies toward Africa must increase the ability of African consumers to purchase U.S. exports.

For hundreds of millions of potential African consumers to be able to buy more from U.S. producers, these Africans must be able to sell what they produce.

The Bipartisan African Growth and Opportunity Act of 2000, spearheaded by Rep. Charlie Rangel (D) of New York, was aimed at increasing African trade by providing preferential access for African exports to the U.S. market — and the initial results are promising.

A recent United States trade representative report cited a 10 percent growth in total AGOA exports to the United States from sub-Saharan Africa in 2002.

The small southern African country of Lesotho received $122 million in new investment capital as a result of AGOA during the first year. In Malawi, at least 600 new jobs were created during the same time frame.

Nevertheless, for U.S. trade with Africa to reach its potential, economic development on the continent must reach a far wider share of the African population.

Otherwise, we must seriously consider the implications of a recent study by the International Monetary Fund that looked at growth models in Burkina Faso, Côte d’Ivoire, Ghana, Mali, Tanzania and Uganda. That IMF study concluded that we should not expect the existence of “new emerging-market economies” in Africa prior to 2020.

What can we do to modify this dire prediction? Several common-sense measures would be a good start.

We know, for example, that the development of African agriculture will be a key factor in movement toward sustained economic development on the continent. We also know that approximately 80 percent of sub-Saharan Africans live in rural areas.

These facts support proposals to expand aid programs that improve the production and marketing capacity of small-scale African farmers — reversing the downward trend in targeted agricultural aid during the 1990s.

The exclusion of agriculture exports from Africa to the United States under AGOA I and II, and the contention that African farmers are on an unequal footing competing in the free market against highly subsidized U.S. and European farmers, raise more difficult considerations.

Of the two, the subsidies issue is probably more significant from the viewpoint of sustained and broadly based African development.

In April, four West African countries (Benin, Burkina Faso, Chad and Mali) jointly submitted a proposal to the World Trade Organization calling for the elimination of farm subsidies over a period of three years (by 2006) and for compensation for lost export revenues due to high Western cotton subsidies that have driven down cotton prices. 

According to a study by the Paris-based Organization for Economic Cooperation & Development, developed countries spend more than $311 billion a year in agricultural subsidies, twice the amount of total farm exports from developing nations. Within the United States, the top 10 percent of farmers — mainly large agricorporations — receive two-thirds of the money.

There should be a way, in practical terms, to respond equitably to the subsidies challenge, protect family farms and restrain price increases to American consumers. The issue will be one of political will.

A second area where targeted aid may substantially advance the goal of sustainable African development is in the area of processing raw materials.

Today, for the most part, raw materials are exported from Africa in their most raw forms. The labor intensive processes of production, completed once the products have left the continent, do not enrich the countries where the materials originated.

It is noteworthy that many of these raw materials are processed in other countries outside the United States for eventual shipment to this country. In these circumstances, our national interest would be served by assisting African countries to develop processing industries that add value to raw materials prior to shipment to the United States.

These practical initiatives, coupled with a reasonable and enlightened response to African requests for debt relief and continued expansion of the African Growth and Opportunity Act, offer tangible opportunities for strengthened economic ties between the United States and Africa.

Three-quarters of a billion Africans are waiting to see whether the United States is serious about a new relationship with their nations.

Rep. Elijah Cummings (D-Md.) is chairman of the Congressional Black Caucus. Rep. Donald Payne (D-N.J.) is ranking member of the International Relations subcommittee on Africa.