2003 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act
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2003 COMPREHENSIVE REPORT ON U.S. TRADE AND INVESTMENT POLICY TOWARD SUB-SAHARAN AFRICA AND IMPLEMENTATION OF THE AFRICAN GROWTH AND OPPORTUNITY ACT A Report Submitted by the President of the United States to the United States Congress Prepared by the Office of the United States Trade Representative THE THIRD OF EIGHT ANNUAL REPORTS MAY 2003 2003 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act The Third of Eight Annual Reports May 2003 Foreword ................................................................... iii I. U.S.-African Trade and Investment Highlights ..............................1 II. Executive Summary .....................................................3 III. The African Growth and Opportunity Act (AGOA) ..........................5 A. AGOA Summary, Eligibility, and Implementation .................5 B. AGOA II ..................................................11 C. Outreach ..................................................11 IV. Economic and Trade Overview ..........................................15 A. Economic Growth ..........................................15 B. Africa’s Global Trade .......................................16 C. Trade with the United States ..................................18 D. International Financing, Investment Results, and Debt ..............19 E. Economic Reforms .........................................22 F. Reforms Undertaken by AGOA Beneficiary Countries ..............23 G. Regional Economic Integration ................................25 H. Africa and the WTO .........................................29 V. Trade Capacity Building ................................................33 A. USTR Activities ............................................33 B. USAID Initiatives ..........................................34 C. U.S. Department of Commerce Programs ........................38 D. U.S. Department of Agriculture ................................39 VI. Technical Assistance and Other AGOA-Related Initiatives ...................41 A. Millennium Challenge Account ................................41 B. USAID Technical Assistance ..................................41 C. Sustainable Development, the Environment, and Labor .............43 D. Transportation and Communication Infrastructure Development ......45 E. Energy Infrastructure Development .............................48 F. HIV/AIDS ................................................50 i G. Small Business Development .................................54 H. Overseas Private Investment Corporation ........................55 I. Export-Import Bank Initiatives ................................56 J. U.S. Department of Commerce Initiatives .......................58 K. U.S. Bureau of Customs and Border Protection ...................59 L. U.S. Trade and Development Agency ...........................60 M. African Development Foundation .............................61 VII. U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum ............63 VIII. Free Trade Agreement with the Southern African Customs Union .............67 IX. AGOA Country Reports ................................................69 X. Other Resources for Information on U.S. Trade and Investment Policy Toward Africa and AGOA Implementation .....................................119 Annexes A. AGOA Beneficiary Countries .........................................121 B. AGOA Eligibility Criteria ............................................123 C. List of Frequently Used Acronyms .....................................127 ii Foreword Section 106 of the African Growth and Opportunity Act (AGOA), Title I of the Trade and Development Act of 2000, requires the President to submit a report to Congress annually through 2008 on trade and investment policy toward Africa and on implementation of AGOA. The Act also requires the President to submit a report to Congress on potential free trade agreements with sub-Saharan African countries. These reports required under AGOA continue a series of annual Presidential reports to Congress on U.S. trade and investment policy toward Africa required under the Uruguay Round Agreements Act of 1994. This is the third of eight annual reports required under AGOA. The current report builds on the information provided in previous reports, providing new and updated information on U.S. trade and investment policy toward sub-Saharan Africa, including the implementation of AGOA, the designation of AGOA beneficiary countries, the impact that AGOA has had on U.S. trade and investment with sub-Saharan Africa, and information on reforms being undertaken by AGOA beneficiary countries. It was prepared by the Office of the United States Trade Representative with input from numerous federal agencies and offices including the National Security Council, the Departments of Agriculture, Commerce, Energy, Health and Human Services, Labor, State, Transportation, and Treasury, as well as the African Development Foundation, the Council of Economic Advisors, the Environmental Protection Agency, the Overseas Private Investment Corporation, the Small Business Administration, the U.S. Agency for International Development, the U.S. Bureau of Customs and Border Protection, the U.S. Export-Import Bank, the U.S. International Trade Commission, and the U.S. Trade and Development Agency. iii I. U.S.-African Trade and Investment Highlights • AGOA continues to bolster the U.S.-sub-Saharan African trade and investment relationship. Total trade between the United States and the region was nearly $24 billion in 2002, with U.S. exports of $6 billion and U.S. imports of $18 billion. U.S. imports under AGOA were valued at $9 billion in 2002, a 10 percent increase from 2001. The U.S. direct investment position in sub- Saharan Africa increased 5.8 percent at year-end 2001, to $10.2 billion, boosted largely by investments in the petroleum sector. • In August 2002, President Bush signed into law important enhancements to AGOA as part of the Trade Act of 2002. These “AGOA II” revisions extended duty- and quota-free treatment to knit-to-shape apparel, doubled the annual quantitative limit on apparel produced in the region from regional fabric, and granted lesser developed country apparel benefits to Botswana and Namibia. • In November 2002, U.S. Trade Representative Zoellick notified Congress of the President’s intent to initiate negotiations leading to a free trade agreement (FTA) with the five members of the Southern African Customs Union (SACU) – Botswana, Lesotho, Namibia, South Africa, and Swaziland. This is in keeping with the goal set forth in AGOA of pursuing FTAs with sub- Saharan African countries. The U.S.-SACU FTA is expected to create new commercial opportunities for U.S. companies, farmers and workers. • Thirty-eight of the 48 sub-Saharan African countries are now eligible for AGOA. Three new countries were added since May 2002: Cote d’Ivoire, The Gambia and the Democratic Republic of the Congo. Sierra Leone was granted AGOA trade benefits in October 2002; previously, it had only limited AGOA benefits. • There are now 19 countries eligible to receive AGOA’s textile and apparel benefits. Several more are currently seeking approval for such benefits. Six countries have qualified for AGOA’s special handloomed, handmade, and folklore textile and apparel provisions. • The second annual meeting of the U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum was held in Mauritius in January 2003. U.S. Trade Representative Zoellick led the U.S. delegation, which included representatives from 13 government agencies. Five Members of Congress also attended, including House Ways and Means Committee Chairman Bill Thomas. Ministers and senior officials from nearly all AGOA beneficiary countries participated. During the Forum, President Bush announced his intent to seek an extension of AGOA beyond 2008. • Since 1999, the United States has provided over $345 million in trade capacity building assistance to sub-Saharan African countries. To improve the delivery of such assistance, USAID has established three Regional Hubs for Global Competitiveness in Africa, staffed by experts on the WTO, AGOA and other trade-related topics. • Sub-Saharan African countries are expected to receive a substantial portion of the assistance provided under the President’s Millennium Challenge Account Initiative, which is scheduled to begin in FY04. • The HIV/AIDS pandemic could seriously affect efforts to strengthen the U.S.-sub-Saharan African trade and investment relationship. President Bush has pledged $15 billion towards the fight against HIV/AIDS over the next five years, beginning with $2 billion in FY04. -1- II. Executive Summary Many important milestones were achieved during the past year in the expansion of AGOA and the strengthening of the United States’ trade and economic relationship with the countries of sub- Saharan Africa. These included: the passage of AGOA II, which significantly enhanced AGOA’s apparel benefits; the announcement of negotiations for a U.S. free trade agreement with the Southern African Customs Union (SACU), the first-ever such U.S. agreement with sub-Saharan African countries; the addition of three new AGOA-eligible countries, bringing the total to 38; the holding of the second annual U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum in Mauritius, the first time the event has been held in Africa; and a significant increase in African exports under AGOA, especially of non-fuel goods. AGOA is