MIAMI UNIVERSITY—THE GRADUATE SCHOOL

CERTIFICATE FOR APPROVING THE DISSERTATION

We hereby approve the Dissertation

of

Keith E. Noble

Candidate for the Degree:

Doctor of Philosophy

______(Dr. John M. Rothgeb, Jr.), Director

______(Dr. Ryan J. Barilleaux), Reader

______(Dr. Abdoulaye Saine), Reader

______(Dr. Othello Harris), Graduate School Representative

ABSTRACT

The Complete Guide To Understanding The U.S.-sub-Saharan African Trade Relationship: Analysis and Opinions On The Ghanaian Implementation Of The African Growth & Opportunity Act (AGOA)—A Case Study

By Keith E. Noble

This dissertation examines the scope of trade relations between the United States and sub-Saharan Africa—a relationship that since 2000, has largely been shaped by the African Growth & Opportunity Act (AGOA). That is to say, the utility of this, the most ambitious trade agreement between both the U.S. and sub-Saharan Africa, will be analyzed in order to determine if AGOA has substantially diversified and has expanded the trade relationship between these two trading partners. Specifically, the research reported herein is divided into four parts. The first reviews the current academic literature on PTAs. The second examines the origins, structure, and the processes by which AGOA has been implemented throughout sub- Saharan Africa. The third examines the impact that AGOA has had on U.S.-sub-Saharan African trade relations. Lastly, the fourth explains (1) Ghana’s position in the world economy, (2) the history of Ghana’s trade relations with the U.S., and (3) the state of AGOA implementation in Ghana to date. The analysis of how AGOA has been implemented in Ghana was conducted by the use of a specially designed Ghanaian-AGOA survey. Interviews were conducted with U.S. and Ghanaian government officials and private industry representatives. The research revealed that the three most common problems cited by respondents explaining Ghana’s inability to successfully use AGOA as a means to reach the vast American market included low capacity, poor infrastructure, and the lack of Ghanaian expertise with regards to U.S. trade laws. The research also revealed that to a large degree, Ghanaians do not believe that that AGOA will substantially alter Ghana’s trade position with the U.S. in the near term. The dissertation concludes by recommending African nations to place capacity building as one of their highest priorities in terms of economic development. It also highlights several export-oriented sectors within the Ghanaian economy that have the potential to be competitive in international markets. The Complete Guide To Understanding The U.S.-sub-Saharan African Trade Relationship: Analysis & Opinions On The Ghanaian Implementation Of The African Growth & Opportunity Act (AGOA)—A Case Study

A DISSERTATION

Submitted to the Faculty of

Miami University in partial

fulfillment of the requirements

for the degree of

Doctor of Philosophy

Department of Political Science

By

Keith E. Noble

Miami University

Oxford, Ohio

2006

Dissertation Director: Dr. John M. Rothgeb, Jr. TABLE OF CONTENTS

LIST OF TABLES iv

LIST OF TERMS v

NAME INDEX ix

DEDICATION xii

PROVERB xii

ACKNOWLEDGEMENTS xiv

CHAPTER ONE Introduction 1 Literature Review 6 Research Design 24 Research Approach 25 Data Collection 26 Chapter Outlines 27 Chapter One Notes 29

CHAPTER TWO THE ORIGINS & IMPLEMENTATION OF AGOA 33 Implementation 36 Eligibility 49 Successes Stories 61 Dollars and Cents 68 Chapter Conclusion 74 Chapter Two Notes 79

CHAPTER THREE THE GHANAIAN IMPLEMENTATION OF AGOA—A CASE STUDY 85 Economic Outlook 86 U.S.-Ghanaian Trade Relations 95 Interview Results 101 Chapter Summary 117 Chapter Three Notes 123

CHAPTER FOUR CONCLUSIONS AND RECONMONDATIONS 126 Overview 126 Theoretical Implications 131 Policy Recommendations 138 Future Research 142 Chapter Four Notes 145

ii

APPENDIX A. (Ghana) AGOA Survey 147

APPENDIX B. Ghana: Prime & Focused Investment Destination For AGOA (African Growth and Opportunity Act) 150

APPENDIX C. New Export Opportunities Under The African Growth And Opportunity Act (AGOA) 153

BIBLIOGRAPHY 157

iii LIST OF TABLES

Table 1: Regional Trade Agreements In Effect Or Under Negotiation (As of May 2003) 2

Table 2: Developing-country participation in regional trade agreements (As of May 2003) 2

Table 3: Developing Regions With Least Developed Countries 3-4

Table 4: AGOA—Before and After 46

Table 5: Criteria For Eligibility Under GSP 52

Table 6: Discretionary Criteria For Eligibility Under GSP 52-53

Table 7: AGOA Eligibility Status 54-55

Table 8: AGOA Nations Eligible For Apparel Benefits 58-59

Table 9: Trade Between The U.S. and South Africa (Million) 63

Table 10: U.S. Trade with sub-Saharan Africa (Billions) 69

Table 11: Sub-Saharan Africa’s Principle Trading Partners (2003) 69-70

Table 12: Leading U.S. Imports from sub-Saharan Africa 72

Table 13: U.S. Exports to Major sub-Saharan African Trading Partners (2004) 73

Table 14: U.S. Imports from sub-Saharan African Trading Partners (2004) 73-74

Table 15: Ghana Leading Exports (1993, 1999, and 2003) 88-89

Table 16: Ghana: Leading Export Markets 90

Table 17: Ghana: Business Environment 91-92

Table 18: Ghana: Economic Freedom 92-93

Table 19: Ghana: Infrastructure-Related Indicators 94-95

Table 20: Trade Between The U.S. and Ghana (1999-2004) 96

Table 21: Ghanaian Barriers To Trade With The U.S. 99-100

iv LIST OF TERMS

ACP Africa, Caribbean, and Pacific nations

ACT African Coalition for Trade, Inc.

AIDS Acquired Immune Deficiency Syndrome

APEC Asia-Pacific Economic Cooperation

APHIS Animal and Plant Health Inspection Service

ASAP Apparel Sourcing Association Pavilion

AU African Union

AGOA African Growth & Opportunity Act

APD AGOA Professional Development Program

BISF Boston International Seafood Fair

CGD Center for Global Development

CCA Corporate Council on Africa

EC European Community

ECA Hub East and Central Africa Global Competitiveness Hub

ECOCAS Economic Community of Central African States

ECOWAS Economic Community of West African States

EFTA European Free Trade Association

EGAT Bureau of Economic Growth, Agriculture and Trade

EU European Union

FAGE Federal Association of Ghanaian Exporters

FDI Foreign Direct Investment

FSU/CIT Former Soviet Union and other countries in transition

v

FTA Free Trade Area and/or Agreement

FTAA Free Trade Agreement of the Americas

GATT General Agreement on Tariffs and Trade

GIPF Ghana Investment Promotion Forum

GMTI Ghana Ministry of Trade and Industry

GNCCI Ghana National Chamber of Commerce and Industry

GSP Generalized System of Preferences

GNP Gross National Product

HIV Human Immunodeficiency Virus

IIC Institute for International Economics

IGO Intergovernmental Organization

IMF International Monetary Fund

IPPC International Plant Protection Convention

IRB Institutional Review Board for the Use of Human Subjects in Research

ITC International Trade Commission

LDC Least Developed Country

LDBC Lesser Developed Beneficiary Countries

MERCOSUR Mercado Común del Sur (Southern Common Market)

MFN Most Favored Nation

MNC Multinational Corporation

NAFTA North American Free Trade Agreement

NKFL Network Knitwear Fabrics Limited

vi NEPD New Partnership for Africa’s Development

NGO Non-Governmental Organization

NOIC-AGOA National Oversight and Implementation Committee on AGOA

OAS Organization of American States

OECD Organization for Economic Co-Operation and Development

PSI President Special Initiatives

PTA Preferential Trade Agreement

RTA Regional Trade Agreement

RTAA Reciprocal Trade Agreements Act

SACU Southern African Customs Union

SAP Structural Adjustment Program

SAIBL South Africa International Business Linkages

SME Small and Medium-sized Enterprises

TCBP Trade Capacity Building Project

TPSC Trade Policy Staff Committee

UN United Nations

UNCTAD United Nations Conference on Trade and Development

UNIDO United Nations Industrial Development Organization

USAID United States Agency for International Development

USCAD United States Connection for Aid to African Development

USCBTPA United States-Caribbean Basin Trade Partnership Act

USCC United States Chamber of Commerce

USD United States Dollar

vii USDA United Dairy Association

USITC United States International Trade Commission

USTR United States Trade Representative

VER Voluntary Export Restraints

WB World Bank

WTO World Trade Organization

viii NAME INDEX

Kofi K. Apraku Former Ghanaian Minister of Trade and Industry

Tawia Akyea Executive Secretary of the Ghana Exports Promotion Council

Ken Ofori-Atta Chairman of DATABANK

Erik Autor Vice-President of the National Retail Federation

Charlene Barshefsky Former United States Trade Representative

Ron Brown Former U.S. Commerce Secretary

George H.W. Bush Former President of the United States of America

George W. Bush President of the United States of America

William R. Cline Center for Global Development

Vicky Cooper President of the U.S. Chamber of Commerce (Ghana)

Jaya K. Cuttaree Minister of Trade & Industry for the Republic of Mauritius

John Danilovich Chief Executive Officer of the Millennium Challenge Corporation

J.E. Essomba President of Blaz Design Management & Investment

Donald Evans Former U.S. Secretary of Commerce

Godfried Funkor Research and Training Specialist with The Ghana National Chamber of Commerce and Industry

James K. Glassman Washington Post columnist

J.E.B. Haizel Ghanaian Trade Specialist (Sigma One Corporation)

Jon Hunstman Deputy U.S. Trade Representative

Jesse Jackson, Jr. U.S. Congressman (D-IL)

Walter H. Kansteiner Assistant U.S. Secretary of State for African Affairs

Gordon National AGOA Secretariat (Ghana) Kyeremateng

ix

Alan Larson U.S. Under Secretary for Economic, Business, and Agricultural Affairs Delano Lewis Former U.S. Ambassador to South Africa

Florizelle Liser Assistant United States Trade Representative (Africa)

Vijay S. Makhan African Union Ambassador

Luc M. Mbarga Cameroonian Minister of Commerce

Jim McDermott U.S. Congressman (D-WA)

Mandisi Mpahlwa South African Minister of Trade and Industry

Paul Mugambwa Ugandan delegate to the 2006 AGOA Economic Forum

Andrew Natsios Former Administrator of USAID

Fred Oladeinde President of The Foundation for Democracy in Africa

Paul O'Neill Former U.S. Secretary of Treasury

Carol Pineau African journalist

Colin Powell Former U.S. Secretary of State

Condoleezza Rice U.S. Secretary of State/Former U.S. National Security Advisor

John Richter Director of Export-Import [Ex-Im] Bank Africa

Ed Royce U.S. Congressman (R-CA)

Renato Ruggiero Chairman of Citigroup Switzerland and past Director-General of the WTO (1995-1999)

Caroline Kendem- President and founding owner of Brodwell International Sack

Theotonio Political scientist Dos Santos

Abar Sattar Chief of Party (Sigma One Corporation)

Sonia Sharara Co-owner of Pecheries Frigorifiques du Senegal

x David P. Shark Former Deputy Chief of the U.S. Mission to the WTO

U.S. Foreign Service U.S. Embassy (Accra, Ghana) Officer (anonymous) Ann Veneman Former U.S. Secretary of Agriculture

Holly Vineyard U.S. Deputy Assistant Secretary of Commerce for Africa, Middle East, and South Asia Kwame Amoako Ghanaian delegate to the 2006 AGOA Economic Forum Tuffuor

Rosa Whitaker Founder/Chairman of the Whitaker Group, Inc.,

David Yawson Business Development Specialist (Federal Association of Ghanaian Exporters)

Robert Zoellick Former United States Trade Representative

xi DEDICATION

To my wife

Shavonda M. Noble

my parents

Charles W. Noble, Jr. and Clarissa A. Clark

and to the Village that raised me…….

Thank You

xii PROVERB

Ubugirirgiri bugira babiri Translation: An astute undertaking requires two persons Meaning: Good planning, decision making, and hard work require the participation and involvement of more than one person African Proverb—

xiii ACKNOWLEDGEMENTS

There are a number of people that at this time I wish to thank for assisting me in both the completion of this dissertation as well as my graduate studies here at Miami

University.

I would like to first thank my dissertation director, Dr. John M. Rothgeb, Jr., for serving as both a mentor and a friend to me during these past three years. The completion of this project is duly accorded to Dr. Rothgeb’s belief that I possessed the necessary talents and skills needed to bring such an ambitious project as this to the light of day. He is without question one of the most gifted professors that I have ever had the pleasure to study under.

I would next like to extend my deepest gratitude to my dissertation committee for their assistance in helping me complete my doctoral work in a timely manner. Professors

Ryan J. Barilleaux, Abdoulaye Saine, and Othello Harris represent the best Miami

University has to offer—you are true educators.

This research project would have not been possible without the willingness of the following people to be interviewed: Vicky Cooper, David Yawson, J.E.B. Haizel, U.S.

Embassy Employee (anonymous), Abar Sattar, Godfried Funkor, and Gordon Asare-

Kyeremateng. I would also like to recognize Professor Gail Della-Pianna for giving me the once in a lifetime opportunity to travel with her to Ghana for the purposes of conducting field research for the this study; and Samuel and Grace Adovor for graciously inviting me to live amongst them as a member of their family for those precious three weeks I spent in Accra, Ghana.

xiv Marc N. Bacharach, deservers special mention here as well. Together, we have

supported one another through thick and thin during are stay at Miami. Marc Bacharach

is the only peer I have ever stood in awe of. Yet, for those who know him best, his

superior intellectual curiosity and natural academic abilities all pale in comparison to his

compassion for his fellow man, he is a true friend—Toda.

I want to also thank my family and friends for their continued support through out

the years. I stand today as living example of the ancient African proverb: It takes a

village to raise a child. I will never forget the lessons you have taught me. I promise to

live the life of a giver, for it is without question the highest form of living.

Lastly, but certainly not least, I have to thank my wife Shavonda for her

unwavering support in all of my endeavors. She has given my life new purpose and

meaning since we first met at the 2002 Miami University GSCA Graduate Retreat. I look

forwarded to living out the rest of my days with you. Together, there is nothing that we cannot accomplish.

xv CHAPTER ONE

Introduction

For Africa, trade is not only an exchange of goods and services, but also an exchange of ideas. As the continent becomes more integrated through trade in the global economy, Africans and their governments are learning to do business according to new rules; these rules will bring with them much needed stability and predictability that are critical to economic growth. ─Alan P. Larson, U.S. Under Secretary for Economic, Business, and Agricultural Affairs1

Discussion over the utility of preferential trade agreements (PTAs) is without question one of the most highly publicized debates in the international political economy literature.2 To understand the significance in the rise of the PTA movement, one need only look at the numbers (Table 1 and Table 2). Renato Ruggiero, Chairman of Citigroup Switzerland and past Director-General of the World Trade Organization (WTO), underscored this point when he suggested in 2004 that roughly 155 regional trade agreements were in force around the world, with half of them concluded since 1990; 83 were concluded but not notified to the WTO; and 46 were in the making. Ruggiero further goes on to suggest that every WTO member is a part of at least one of them, and that almost half of all world trade now occurs between nations belonging to PTAs.3

Table 1

Regional Trade Agreements In Effect Or Under Negotiation (As of May 2003) Country/region Notified to WTO Concluded but Under Total Share not notified negotiation (percent)

1 U.S. State Department, AGOA III: The United States Africa Partnership Act of 2003, http://www.state.gov/e/rls/rm/2004/3077.htm, 6/16/2004. 2 PTAs are agreements among a collection of nations involving the preferential treatment of bilateral trade between any two parties to the agreement relative to their trade with the rest of the world. Preferences, however, need not extend to all trade between the two, and the coverage could depend on the type of PTA. Custom’s unions and free trade areas are common forms of PTAs. 3 Ruggiero, Renato, (Jeffrey J. Schott) Free Trade Agreements: US Strategies and Priorities, Institute for International Economics, Washington, DC, April 2004, p.25. PTAs were originally permitted by the General Agreement on Tariffs and Trade (GATT), and at present, by the WTO, through Article XXIV of the GATT. Article XXIV allowed for PTAs, provided that: preferences were 100% (that is, tariff levels between the partners were zero); that there would be a definite plan and timetable for achieving free trade among the participants; that PTAs were to be phased in on a definite timetable; and finally, PTAs were permissible so long that they did not increase protection against the rest of the world.

1 Agreements 155 83 46 284 100 United States 3 2 6 11 4 Canada 4 0 5 9 3 European 59 6 6 71 25 Union/EFTA Japan 1 0 1 2 1 Intra-FSU/CIT 41 48 6 95 33 Intra-developing 27 26 23 76 27 countries EFTA=European Free Trade Association FSU/CIT=former Soviet Union and other countries in transition Source: WTO website: Trade Topics, http://www.wto.org/english/tratop_e/region_e/region_e.htm, 4/2/2006.4

Table 2

Developing-Country Participation In Regional Trade Agreements (As of May 2003) Country/region Notified to WTO Concluded but Under Total Share not notified negotiation (percent) Developing- 76 34 39 149 100 country agreements United States 3 2 4 9 6 Canada 4 0 3 7 5 European 24 5 5 34 23 Union/EFTA Japan 1 0 1 2 1 Intra-FSU/CIT 16 0 0 16 11 Intra-developing 27 26 23 76 51 countries Source: WTO website: Trade Topics, http://www.wto.org/english/tratop_e/region_e/region_e.htm, 4/2/2006

However, despite the fact that most of sub-Saharan Africa’s forty-nine nations are affiliated with numerous PTAs (on average, each sub-Saharan African nation belongs to roughly four regional trade agreements RTAs) today, the region on the whole remains the poorest in the world.5 As Table 3 illustrates, compared with other least developed

4 Agreements are counted only once, even if they are notified to the WTO under both GATT Article XXIV and GATS Article V. However, the North American Free Trade Agreement is counted twice, as US- NAFTA and Candia-NAFTA. Current negotiations on a Free Trade Area of the Americas are counted twice as US developing countries and Canada developing countries; similarly, the Canada-EFTA FTA is counted under Canada and under EFTA. 5 World Bank, 2004, Global Economic Prospects 2005 (Washington, D.C.: World Bank). In total, sub-Saharan African nations are signatories to thirty RTAs.

2 regions around the globe, Africa’s poor rank dead last with regards to gross national income (GNI). According to the 2002 United Nations Conference on Trade and Development (UNCTAD) Least Developed Countries Report, the proportion of people in the twenty- nine African LDCs living below $2 per day increased from 82% in the late 1960s to 87.5% in the late 1990s. For those in extreme poverty, which is determined as those individuals who make less than $1 per day, the increase was from 55.8% to 64.9%.6 The Report also stated the number of Africans living in extreme poverty in these nations rose dramatically from 89.6 million to 233.5 million over the same period.7 Table 3

Developing Regions With Least Developed Countries (LDCs)

800 700 600 500 Oceania 400 300 Asia 200 Caribbean 100 sub-Saharan Africa 0 Oceania Asia Caribbean sub- Saharan Africa

Averaged Gross National Income (GNI) per capita, (U.S. Millions) Source: World Bank: Data & Statistics, http://www.worldbank.org/data/countrydata/countrydata.html, 7/6/2005.8

These statistics seem to fly in the face of those in the second camp (discussed later in the chapter) who argue that PTAs ultimately increase trade, wealth, and development for all nations. For it should be noted that the sub-Saharan African region

6 Ramachandran, Anjali, Summary of UNCTAD’s Least Developed Country (LDC) Report 2002, http://icdasecretariat-docs.bravepages.com/icdalatest/reports/UNCTAD-LDCreport2002.htm, 4/26/2005. 7 Ben-Ari, Nirit, Poverty is Worsening in African LDCs, http://www.globalpolicy.org/socecon/develop/africa/2002/09ldcs.htm, 4/25/2005. 8 Table 1 represents the average GNI amount of the combined LDCs in each of the respected four regions. At present, five Oceanic, ten Asian, one Caribbean, and thirty-four African nations are officially recognized by the U.N. as LDCs.

3 has participated in PTAs for the last past thirty years, or since the time of the first Lomé Convention in 1975.9 For those interested in understanding the less than favorable outcomes of PTAs where as sub-Saharan Africa is concerned, the PTA literature has, to date, offered very little insight. In essence, it is argued that little has been done in the form of case study analysis on sub-Saharan Africa. As a result, the literature provides little guidance as to the problems the sub-Saharan African region has faced with regards to its trade and development initiatives with the developed world. Olufemi A. Babarinde’s book, The Lomé Conventions and Development: An Empirical Assessment, represents one of the few comprehensive works on sub-Saharan African trade regimes in the PTA literature. Babarinde, in assessing the Lomé Conventions, examines, by way of multiple regression analysis, the impact of trade and foreign direct investment (FDI) regimes of the Lomé Conventions on the development aspirations of ACP states. Babarinde’s analysis of the Lomé Convention’s impact on the overall development of the ACP states was not encouraging. Upon the conclusion of his study, Babarinde summarized that both ACP and non-ACP states were generally unable to use their trade with the European Community (EC) through the Lomé Conventions to significantly induce economic and social development. Babarindes analysis demonstrated that after 1975, among ACP states, that there was no noticeable increase in their volume of trade with the EC. 10 With regard to sub-Saharan African and the PTA literature, Babarinde is of the opinion that the relevant literature on this subject seems to have avoided the crucial question of how PTAs have affected the economic development of LDCs, and subsequently, sub-Saharan Africa. In speaking on the relevant literature covering the Lomé Conventions, Babarinde argues that the literature has not attempted to measure the impact of EC-ACP trade on economic growth among ACP states. He thought it strange

9 The Lomé Convention was a treaty that regulated trade between the European Union (EU) and seventy- one (later seventy-seven) African, Caribbean and Pacific states (ACP states ) between 1975 and 2000. Established in 1975 in Lomé, Togo, the treaty preserved some of the preferential access rights of members of the Commonwealth of Nations to the United Kingdom market on its entry into the Union. It was renewed in 1979, 1985, 1989, and 2000 before being succeeded by the Cotonou Agreement. 10 Babarinde, Olufemi A., The Lomé Conventions and Development: An Empirical Assessment, Ashgate Publishing Company, 1994, p.135.

4 given that the trade regime under Lomé was designed to boost ACP exports to the EC market, that at the time of the printing of his book, no direct scholarly work was attempted to examine whether this key element of the EC-ACP agreements had indeed stimulated economic growth and development in ACP states. Babarinde attributes the lack of scholarly work on sub-Saharan Africa PTAs to a general lack of interest and engagement on the part of academics and researchers on the subject.11 Literature Review While no one would argue against the importance that PTAs play in the modern system of international trade, there is wide debate over the utility and/or appropriateness of PTAs in the structuring of global trade. The debate over PTAs can be categorized into three distinct camps. The first camp consists of those who oppose PTAs on the grounds that they undermine the development of the multilateral trading system, and that they function as a stumbling block to global trade liberalization on the whole. Those in the second camp support PTAs because they believe PTAs increase trade, overall wealth, and improve welfare benefits among the participants in these agreements. Lastly, for individuals and groups in the third camp, trade liberalization of any kind is opposed. The main concern here is that the liberalization of trade has negatively impacted import- sensitive sectors such as the environment, and represents a threat to state sovereignty. First Camp

The proliferation of bilateral trade agreements outside the WTO process is betraying the multilateral ideals that underlay the WTO and its forerunner, the General Agreement on Tariffs and Trade. —Peter Sutherland, Past Director-General of the WTO/GATT12

The opinions of both academics and economists that make up the general beliefs of the first camp suggest that the spread of PTAs is hazardous to the continued existence of the multilateral trading system. The overarching concern here is that PTAs will ultimately lead to the formation of world trading blocks consisting of high barriers to trade; resulting in a likely scenario in which trade diversion and trade wars cease to be

11 Id, at p.69. 12 Global Growth Blog, WTO Commission Attacks ‘Spaghetti Bowl’ Deals, http://global- growth.blogspot.com/2005/01/wto-commission-attacks-spaghetti-bowl.html, 5/5/2005.

5 outside the realm of probability, but rather become apart of the prevailing trade norms of the day.13 Anne O. Krueger has raised two primary concerns relating to the increased presence of both PTAs and regional trade agreements (RTAs) in the international system. Her first concern, which is widely shared by many within the first camp, holds that while trade may increase between parties within a PTA, as has been the case within the North American Free Trade Agreement (NAFTA), the European Union (EU) and the Southern Common Market (MERCOSUR), for those nations outside of the agreement, they will likely face rising barriers to trade on account of such agreements. Krueger cites Mexico as a clear example of how PTAs ultimately lead to increased barriers to trade. Mexican trade authorities in 1998, in response to their 1994 financial crisis and the sharp drop in oil prices, raised tariffs against imports from other countries, thus increasing discrimination against non-NAFTA members.14 Krueger also takes issue with the practice of using the precious resources of trade ministries, resources that usually limited, for the purposes of forming a PTA so as to distract attention from multilateral liberalization. For Krueger, it is believed that the resources needed to successfully implement a PTA can be used more efficiently by securing multilateral trade agreements. Again, using examples, Krueger points to the fact that U.S. officials during the NAFTA negotiations were so fully absorbed in that activity that they did not support other multilateral efforts as much as they would have otherwise done.15 Noted economist, Jagdish Bhagwati, has sought to dispel many of the prevailing myths that support PTAs. In response to PTA advocates’ claims that PTAs between natural trading partners are desirable, Bhagwati suggests that at best, this view represents a confusion between a smaller scope for trade diversion and a larger outcome

13 Trade diversion occurs when a free trade area (FTA) diverts trade away from a more efficient supplier outside the FTA, and towards a less efficient supplier within the FTA. Trade diversion differs from trade expansion in that trade expansion occurs when a free trade area creates trade that would not have otherwise existed. As a result, supply occurs from a more efficient producer of the product. 14 Krueger, Anne O., Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?, Journal of Economic Perspectives—Volume 13, Number 4—Fall 1999, p.119. Mexican tariffs were not raised on the other two NAFTA nations (U.S. and Canada). 15 Id, at p.155. Krueger suggests that on account of the high intensity of U.S. trade officials during the NAFTA negotiations, that other multilateral trade agreements were temporarily put on the back-burner.

6 of it, and at its worse, it confuses the average with the margin.16 He further argues that higher trade volumes created by PTAs can possibly lead to greater not smaller losses to a member country that comes to the PTA from a higher initial set of tariffs. This occurs on account that PTA will redistribute tariff revenues away from the new member state and to the pre-existing members with lower initial tariffs. His last critique on the natural trading partner’s argument paints the initial high volume of trade occurring between participants of a PTA to be the artificial result of earlier preferences. According to Bhagwati’s analysis, new preferences are effectively justified by reference to old preferences; an argument he suggests is dangerous on account that added preferences, on top of earlier preferences, can result in welfare losses to member nations. Bhagwati’s response to the advocates of PTAs second claim, that regional nations who are contiguous or share common borders must also be beneficial, reasons that such an argument is not valid. In essence, Bhagwati’s argument states that the distance between trading countries does not correlate with trade volumes. The third claim that Bhagwati seeks to expose contends that since PTAs are formed under the Article XXIV of the GATT, that they should shield non-members against losses imposed by trade diversion. In response, Bhagwati argues that the problem with this claim is that it simply does not come to grips with the fact that today’s trade barriers come more in the form of administered protection (i.e. voluntary export restraints (VERs) and antidumping actions). In his opinion, the lack of effective discipline in these matters then enables member nations to discriminate effectively against nonmembers, making it possible and even likely that trade creation will be converted into trade diversion by resorting to sum discrimination against nonmembers at the margin.17 Perhaps Bhagwati’s strongest critique illuminates the explosive proliferation of PTAs in general. In his book, Free Trade Today, Bhagwati suggests that the architects of the GATT would be aghast today at the wild horses and rogue elephants that have

16 Natural Trading Partners: Belief that nations should encourage preferential trade arrangements between geographically proximate countries over preferential arrangements between distant ones. Supporters of this belief would contend that trade between geographically proximate countries will lead to trade creation, and thus, should be considered natural, while on the other hand, preferential trade between distant countries is usually viewed as leading to the creation of trade diversion. 17 Bhagwati, Jagdish, Panagariya, Arvind, The Economics of Preferential Trade Agreements, AEI Press, Washington, D.C., 1996, p.xiv-xvi.

7 marched through the door by way of Article XXIV. Bhagwati describes the proliferation of PTAs as representing a spaghetti bowl—an unruly mass of criss-crossing strings. Bhagwati’s spaghetti bowl consists of a messy maze of preferences that are formed between two countries involved in a PTA, with each having bilateral agreements with other nations, and with the latter in turn bonding with yet others, each in turn having different rules of origin for different sectors, and so on.18 In their book, The Dangerous Drift to Preferential Trade Agreements, both Bhagwati and Krueger describe the obsession with, and the further expansion and creation of free trade areas (FTAs), instead of increased concentration on multilateralism at the WTO, as a mistake. In speaking on the problems associated with PTAs, Bhagwati and Krueger point to several factors they call into question about the utility of the PTA movement. They argue that the rules of origin, their first factor, are inherently arbitrary and multiply under FTAs and PTAs due to the fact that different members have different external tariffs. As they see it, lobbyists, who seek to protect themselves by fiddling with the adoption of those rules and then with estimates that underlie the application of those rules, and customs officers, who stand to make vast amounts of money by assigning goods to different origins as suggested by those fetching gifts, profit immensely at the public’s expense.19 Their second factor, which they site is more general in nature, suggests that it is increasingly arbitrary and nonsensical to operate trade policies of all kinds on the assumption that one can identify which product is whose. In their opinion, the who’s whose in defining trade policy ultimately ties trade policy in knots, which in turn absurdities and facilitates protectionist capture. In further analyzing this second factor, Bhagwati and Krueger highlight both U.S. efforts to get the Japanese to stop counting exports of vehicles from their U.S. plants as U.S. exports, and the European Union’s (EU) attempts to include those very same cars from U.S. plants as apart of their VER

18 Bhagwati, Jagdish, Free Trade Today, Princeton University Press, Princeton, New Jersey, 2002, p.112. 19 The rules of origin represent laws, regulations and administrative procedures which determine a product’s country of origin. A decision by a customs authority on origin can determine whether a shipment falls within a quota limitation qualifies for a tariff preference or is affected by an anti-dumping duty. These rules can vary from country to country.

8 quotas on Japanese cars, as clear examples of the problems associated with the second factor.20 Their next factor calls into question the assertion that by joining a PTA such as the proposed Free Trade Agreement of the Americas (FTAA), developing nations are better able to gain international credibility, and are better positioned to lock in political and economic reforms. In response, Bhagwati and Krueger argue that GATT bindings can equally lock in such liberalization. They also mention that for developing nations, it is much more difficult for them to skip out on GATT obligations as opposed to leaving an agreement like NAFTA once one is a member.21 In regards to the credibility question, they suggest that real credibility in a nation’s reforms can come only from the credibility of that nation’s economic policies, and not from an external pact such as NAFTA.22 Bhagwati and Krueger’s final factor concerns itself with the entry of new members into a FTA. They contend that new members of a FTA can reasonably be expected to dilute the value of concessions obtained by existing members. Thus, it is reasonable to expect that the terms in which each new entrant to a FTA gains admission will presumably be less and less favorable overtime. This in turn they argue may cause those nations already in the FTA to become more reluctant to admit future entrants.23 Richard N. Cooper expands upon many of the points raised by Bhagwati and Krueger. Cooper argues that the U.S., by discriminating in favor of one trading partner, it by proxy, discriminates against other viable trading partners as well. He believes that nations such as the U.S., who have developed global trade interests and pretensions of having global political interests and influence, are embarking on an unwise course of action. By conducting trade in this manner, Cooper contends that the U.S. creates a select grouping of friends, while at the same time, creating an ever larger grouping of displaced traders; a policy that he describes as bad politics. Cooper, in agreeing with Bhagwati and Krueger, takes issue with the rules of origin clause that is usually associated with most PTAs. In his opinion, the rules origin

20 Bhagwati, Jagdish, Krueger, Anne O., The Dangerous Drift to Preferential Trade Agreements, The AEI Press, Washington, D.C., 1995, pp.1-4. 21 Bhagwati and Krueger here suggest that for developing nations, it is easier for them to leave a trade agreement like NAFTA or AGOA, as opposed to say the GATT/WTO. In their opinion, leaving the GATT/WTO trade system carries with it more negative consequences than leaving a smaller PTA. 22 See Bhagwati, supra note 17, at p.7. 23 Id, at p.27.

9 exist only at the behest of protectionists interests. In support of this claim, Cooper purports that because the rules of origin are generally arcane and technical, outsiders, such as academics and journalists, have quite a hard time paying serious attention to them—even the negotiators quickly lose interest while trying to understand them. Thus, in the end, the lack of understanding and clarity associated with the rules of origin turn out to be highly protectionist.24 In summary, the common belief that connects the authors represented in first camp suggests that PTAs ultimately produce adverse effects for the continued existence of the multilateral trading system. In their attempt to discredit many of the popular beliefs advanced by supporters of the PTA movement, the authors represented by the first camp seemed to take a cause & effect approach in expressing their arguments. In so doing, these authors seem to conclude that a consequence of the increase in trade between parties to a PTA is that the chances of those nations not included in the agreement to face rising barriers to trade is raised significantly. Another cause & effect argument advanced in this section suggest that for countries entering into a PTA with an initial high set of tariffs, that greater and not lesser losses in trade will be incurred by such countries on account of the redistribution of tariff revenues. And finally, it was suggested that by their very existence, PTAs discriminate in favor of one trading partner over another, resulting in the creation of displaced traders (the out-group). Second Camp

All commerce that is carried on between any two countries must necessarily be advantageous to both, and therefore all duties, customs, and excise (on imports) should be abolished, and free commerce and liberty of exchange should be allowed with all nations. —Adam Smith25

In the second camp, PTAs are looked upon as the building blocks to multilateral trade liberalization. The policymakers, economists, and other experts that make up the body of this camp regard PTAs as a means by which to enhance international trade

24 Cooper, Richard N., Comment, in Jeffrey J. Schott, Free Trade Agreements: US Strategies and Priorities, Institute for International Economics (IIE), Washington, D.C., April 2004, pp.20-24. 25 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford: Clarendon Press, 1976, pp.511, 514.

10 between nations, and thus, they generally believe that such agreements should be pursued by all nations. A U.S. International Trade Commission (USITC) study by Grace V. Chomo, who has written extensively on the gains that developing nations stand to enjoy by joining PTAs, argues that when developing nations enter into trade agreements with industrialized nations, they benefit by gaining access to larger markets for products that match the developing nation’s relative factor-abundance compared with the industrialized trading partner. Chomo also categorically denies that developing nations loose their industrial base by signing PTAs with industrialized nations. In defense of her stance, Chomo suggests that most bilateral and multilateral trade agreements between industrialized and developing nations allow for non-reciprocal tariff reductions for developing country members, extensive phase-in periods, and include multiple safeguard measures so as to protect infant industry sectors that are most likely to be injured by trade liberalization. Chomo, while building on research conducted by Frankel and Romer, suggests that trade, whether interregional or international, raises income.26 In her analysis, the Frankel and Romer research, as well as her own, support the belief that export led growth represents for small developing nations, a potential engine for growth. She argues that by accessing the larger international market, small nations can benefit from economies of scale, such as efficiency gains from optimal plant size, that might not be attained with trade occurring in limited domestic markets. In concluding her research on developing nations and PTAs, Chomo suggests that developing nations have the potential for more efficiency and welfare gains from implementing free trade agreements than their industrialized partners due to the high level of trade interventions and inefficiencies observed in developing nations. The gains that Chomo references here would include improved efficiency in sectors previously protected by trade barriers, and increased transparency for doing business. In support of her gains theory, Chomo cites as an example, how the NAFTA dispute resolution

26 Chomo cites work completed by Jeffrey Frankel and David Romer in their 1999 American Economic Review article, Does Trade Cause Growth? Frankel, Jeff A., and Romer, David, Does Trade Cause Growth?, American Economic Review, 1999, vol. 89, issue 3, pages 379-399.

11 mechanism has significantly improved access to legal services for Mexican producers and workers involved in trade disputes with other NAFTA members.27 Robert Lawrence argues a point that is shared by many within the second camp, namely, that recent FTAs involve much more economic integration than the elimination of tariffs and barriers to trade. As Lawrence suggests, PTAs such as NAFTA have led to the reduction in barriers on services trade, foreign investment, and other economic activities not covered by the GATT and the WTO. Lawrence, writing in response to Bhagwati, Krueger, as well as many others in the first camp, argues that the theories they apply to FTAs do not take into account the dynamic welfare enhancing characteristics of FTAs—which he believes are likely to outweigh any trade diversion that results from the elimination of tariffs.28 A CATO Institute study by economist Edward L. Hudgins argues that while it may be preferable to liberalize trade multilaterally, countries should take any available avenue, including bilateral or regional FTAs, and even if they lead to some trade diversion, to increase trade. Hudgins further asserts that FTAs can be more efficient vehicles for addressing difficult trade barriers than the WTO, where the large membership, in the name of consensus, requires much more compromise.29 Economist C. Fred Bergsten holds similar beliefs to the ones expressed by Hudgins in the CATO study. In Bergsten’s opinion, in lieu of multilateral trade negotiations, FTAs are the next best thing—they promote the liberalization of global trade. Bergsten advocates structuring FTAs in such a manner that they serve as the building blocks for the new global system of free trade. In using the Asia-Pacific Economic Cooperation (APEC) agreement as a model, Bergsten argues that future FTAs should be based on the concept of open regionalism. By open regionalism, Bergsten suggests that FTAs should seek to take advantage of natural regional trade relationships

27 Chomo, Grace V., Free Trade Agreements Between Developing And Industrialized Countries: Comparing the U.S.-Jordan FTA With Mexico’s Experience Under NAFTA, U.S. International Trade Commission: Office of Economics Working Paper, January 2002, p.2-5. 28 Lawrence, Robert Z., Regionalism, Multilateralism, and Deeper Integration: Changing Paradigms for Developing Countries, in Mendoza, Miguel Rodriquez, Patrick Low, and Barbara Kotschwar (eds.), Trade Rules in the Making., Organization of American States (OAS)/Brookings Institution Press., Washington, D.C., 1999, pp.41-45. 29 Hudgins, Edward L., Regional and Multilateral Trade Agreements: Complementary Means to Open Markets, Cato Journal. Vol.15. No.23. Fall/Winter 1995/96.

12 amongst potential member nations, while also allowing for other nations to join if they so agree to accede to the conditions of the trade pact. Bergsten also claims that in order to minimize trade diversion, trade and investment should be implemented on either the most favored nation (MFN) principle or conditional MFN in order to limit free rider effects.30 This would lead to what Bergsten believes is a greater willingness on the part of other nations and regional groupings to accept the conditions of the agreement having already been enticed by enhanced trade and investment opportunities until most WTO members are engaged in forming the ultimate global FTA.31 Jeffrey J. Schott, in his book, Free Trade Agreements: US Strategies and Priorities, proclaims that the first and most important benefit of FTAs can be found in the depth of trade reform to which the partner nations aspire. In his analysis, if FTAs are true to their name they will seek to eliminate all substantial barriers to trade between partner nations. Schott suggests this stands in direct contrast to WTO negotiations which tend to pursue at best, only incremental reforms in each trade round, leaving substantial barriers in place after the accords are fully implemented. With this in mind, it would seem that both Schott and Hudgins are in agreement—FTAs are easier to conclude than WTO accords because they require agreement among a small number of like-minded nations rather than among the larger and more diverse WTO membership. Schott takes issue with Bhagwati’s and Krueger’s claims that PTAs do not lock reforms in for participating nations. In response, Schott writes that PTAs often include rights and obligations regarding domestic regulatory practices and other behind-the-door measures that affect trade and investment flows—issues that he argues had not until recently been the primary focus of multilateral negotiations. Schott adds that in several instances, PTA provisions have established precedents for broader multilateral accords in areas such as services and electronic commerce. In addition to the creditability and precedent setting norms that PTAs create, Schott also supports the claim that PTAs serve the purpose of establishing learning-by-

30 Free riders are actors who consume more than their fair share of a resource, or shoulder less than their fair share of the costs of its production. The free rider problem is the question of how to prevent free riding from taking place, or at least limit its negative effects. 31 Bergsten, C. Fred, Open Regionalism: Working Paper 1997, Institute for International Economics, 1997.

13 doing effects by way of the negotiating process. The idea is that the negotiating table offers lessons that can not be duplicated in any classroom or training seminar—trade officials learn to negotiate by negotiating. Schott suggests that this is particularly important for developing nations—PTA negotiations help them to educate the next class of trade negotiators on how to represent their interests in regional and WTO talks. And as for those in first camp who are concerned that the saturation of PTAs will do ineradicable harm to the WTO system, Schott concludes that PTAs ultimately strengthen trade relations among partner nations and make it easier for them to build alliances for WTO reforms in areas of common interest. He asserts that the Doha Round would probably not have been launched had it not been for the U.S. and the EU working in unison to craft a balanced agenda for the talks.32 Douglas A. Irvin, writing in support of one of the most basic tenants of the second camp, has argued that FTAs improve economic performance by increasing competition in the domestic market. Irvin contends that the competition created by FTAs diminishes the market power of domestic firms and leads to a more efficient economic outcome. As he sees it, this benefit does not arise because foreign competition changes a domestic firm’s costs through changes in the scale of output, but rather, it comes about by way of change in the pricing behavior of imperfectly competitive domestic firms. So, with international competition, firms are unable to get away with raising prices past market values and are thus forced to operate in a competitive atmosphere. Variety is another benefit that Irvin suggests FTAs offer prospective nations. FTAs expand the range of intermediate goods available for domestic firms to use as inputs, which in turn, can increase the productive efficiency of the industries that produces the final goods.33 Michael Lusztig, in his book, The Limits of Protectionism: Building Coalitions for Free Trade, perhaps best captures the essence of the second camp’s message to the world. In it, he states that there is little debate among those in the know that free trade is, in the aggregate, economically beneficial. He argues that free trade expands firms’

32 Schott, Jeffrey J., Free Trade Agreements: Boon or Bane of the World Trading System?, in Jeffrey J. Schott, Free Trade Agreements: US Strategies and Priorities, Institute for International Economics, Washington, D.C., April 2004, pp.11-13. 33 Irvin, Douglas A., Free Trade Under Fire, Princeton University Press, 2002, pp.32-35.

14 productive capacities, encourages specialization and efficiency in the productive sector, and broadens consumer choice while subjugating prices to the rigor of market competition. In citing the many benefits of free trade, Lusztig declares that it provides incentives for innovation and foreign investment, creates jobs and raises wages, fosters economic interdependence between nations, and finally, creates disincentives for trading nations to escalate conflicts. Henceforth, under most conditions, Lustig argues that free trade represents the dominant strategy for nations seeking to maximize their aggregate wealth. However, as Lustig notes, free-trade does not always distribute wealth equally. Dislocation associated with free-trade forces such as PTAs can at times force businesses and workers out of the marketplace. As Lustig sees it, A lifetime’s work of building a business can be wiped out in a tidal surge of competition unleashed by free-trade. In underscoring this point, Lustig states that the overall objective of freer-trade is not to maximize justice, but rather, it is to maximize wealth.34 Unlike in the first camp, the authors of the second camp take issue with those who suggest that the spread of PTAs is hazardous to the multilateral system of trade. As was demonstrated in this section, second camp authors support the contention that PTAs enhance international trade between nations. In support of their general argument, evidence was put forth that suggested that for developing nations, PTAs offer them the opportunity to gain access to larger markets for their products; they help to assist developing nations in their efforts to achieve both greater efficiency and increased welfare gains; and by way of negotiation, it was argued that the lessons learned from acquiring PTAs will be useful for the education of future generations of trade negotiators. Other arguments put forth suggested that PTAs contribute to the reduction in barriers to trade, foreign investment, and other economic activities not covered by the GATT or WTO; that PTAs address difficult trade barriers more efficiently than the WTO; and that foremost among the many benefits associated with PTAs, they include the creation of jobs, the procurement of foreign investment, and the introduction of disincentives for trading nations to enter into armed conflict with one another.

34 Lusztig, Michael, The Limits of Protectionism: Building Coalitions for Free Trade, University of Pittsburgh Press, 2004, pp.1-4.

15 Third Camp

Global free trade has become a sacred principle of modern economic theory, a sort of moral dogma. That is why it is so difficult to persuade our politicians and economists to reassess its effects on a world economy which has changed radically. I believe that GATT and the theories on which it is based are flawed and that, if they are implemented, they will impoverish and destabilize the industrialized world whilst at the same time cruelly ravaging the Third World. —James Goldsmith, Chief Executive Officer of the Goldsmith Foundation35

The third camp opposes both PTAs and all forms of trade liberalization/globalization. Included in this group are representatives of import-sensitive industries such as labor unions and representatives of social action groups such as environmentalists and labor rights activists. These groups question the wisdom of trade liberalization whether done through multilateral negotiations or through bilateral and regional trading arrangements. The common belief that ties the advocates of this camp together asserts that trade liberalization unfairly affects workers by exporting jobs to nations with lower wages, and that it undermines all nations abilities to protect their environment by allowing companies to relocate to places with less stringent environmental regulations. Noted environmentalist, consumer rights activist, and past U.S. presidential candidate, Ralph Nader, has accused multinational corporations of operating under the deceptive banner of free-trade to expand their control over the international economy and to undo vital health, safety, and environmental protections won by citizen movements across the globe. Nader argues that mega corporations are looking to achieve an autocratic far- reaching agenda though PTAs such as NAFTA and the GATT. Ralph Nader suggests PTAs are crafted in such a way so that they pit nation against nation in a race to see who can set the lowest wage levels, the lowest environmental standards, and the lowest consumer safety standards (this is otherwise known as the race to the bottom). In Nader’s view, PTAs craft winners and losers long before they ever come into existence; workers,

35 Goldsmith, James, Interview: The Case Against GATT, http://multinationalmonitor.org/hyper/issues/1994/10/mm1094_06.html, 5/6/2005. The Goldsmith Foundation is Europe’s largest privately-funded charity which specializes in the funding of environmental causes.

16 consumers, and communities in all nations loose, while in contrast, the short term profits of big corporations soar; these are the real victors of free-trade.36 Alan Kennington has argued for the complete recall of the entire free-trade agenda. He is of the belief that the destructive tendencies of the global free-trade system far outweigh any tangible benefits to society in general. In explaining his stance on free- trade, Kennington lists several reasons that call into question the expected utility of this approach to global trade. In Kennington’s view, international trade homogenizes cultures, which in turn, may result in destructive consequences for local peoples and customs throughout the international system. One of his major concerns is that while for the business community, free-trade may represent an opportunity for the expansion of markets, for others, especially the minority populations of the developing world, increased market access has resulted in the diminishing and/or extinction of local customs and languages. He next argues that free-trade has placed undeveloped nations into debt bondage. This occurs due to the import of goods and services from developed nations, which under free-trade, equates to vast amounts of high-interest loans. Kennington surmises that when these loans become un-payable, underdeveloped nations enter into debt bondage, which in many cases, is passed down to future generations.37 When a nation has amassed an un-payable debt, the whole nation enters a condition of debt bondage, which as Kennington sees it, equates to a modern slavery. Thus, under the mystic banner of free- trade, lesser developed nations are stripped of their self-autonomy, wealth and honor.38 Lori Wallach, the Director of Public Citizen’s Global Trade Watch, sees her concerns regarding free-trade as having more to do with its seismic impact on health, safety, and environmental laws in the U.S. and other nations around the world. Wallach’s skepticism leads her to conclude that PTAs will lead to the roll-back of decade’s worth of

36 Nader, Ralph, Introduction: Free Trade & The Decline of Democracy, in Greider, William, Atwood, Margaret, Shiva, Vandana, Ritchie, Mark, Bery, Wendell, Brown, Jerry, Daly, Herman, Wallach, Lori, Lee, Thea, Khor, Martin, Phillips, David, Castaneda, Jorge, Heredia, Carlos, Morris, David, and Mander, Jerry, The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power, Earth Island Press, 1993, pp.1-6. 37 Debt bondage occurs when debt is passed from one generation to the next. As it relates to nations, a nation enters into debt bondage when the debt generation A amasses is so great that the next generation, generation B, is burdened with its re-payment. 38 Kennington, Alan, Why International Trade Is Bad, http://www.isometry.com/trade.html, 5/6/2005.

17 environmental, consumer protection, and other worker related safety laws and regulations. Wallach suggests that without immediate reforms to trade policy, future decades will be marked by retrenchment, and that current safeguards that exist to protect unsuspecting customers from bodily harm, will be either preempted or overruled on account that the citizens of world have been effectively shutout of all decision making processes. Wallach also takes issue with the fact that trade agreements are negotiated in secret by governmental representatives working closely with corporate advisors and are enforced through procedures hidden from public scrutiny. Her concern is that these agreements, which tend to be international executive agreements, and not treaties, become part of U.S. federal law once approved by Congress. As such, these trade agreements will supersede all previous state, local, and federal laws. Wallach suggests that the problem with this is that the agreements contain specific rules systems that prohibit signatory nations from restricting both imports and exports with very few exceptions. Wallach contends: If the dispute-resolution system does answer in your favor, as a signatory nation, you are left with only two options, either change or eliminate the challenged law, or face trade sanctions and other related monetary penalties.39 William Greider concludes the third camp’s argument against free-trade and the multilateral trade system by arguing that the global economy, a system that searches the world for the lowest common denominator in terms of national standards for wages, taxes, corporate obligations to health, the environment and stable communities, is running downhill. As Greider sees it, left unchallenged, the global system will continue to undermine the U.S.’s positioning in the global market.40 In review, it should be understood that the literature on PTAs is divided into three separate camps. There exists for those in the first camp a fear that the ever increasing

39 Wallach, Lori, Hidden Dangers of GATT and NAFTA, in Nader, Ralph, Greider, William, Atwood, Margaret, Shiva, Vandana, Ritchie, Mark, Bery, Wendell, Brown, Jerry, Daly, Herman, Lee, Thea, Khor, Martin, Phillips, David, Castaneda, Jorge, Heredia, Carlos, Morris, David, and Mander, Jerry, The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power, Earth Island Press, 1993, pp.23-25. 40 Greider, William, The Global Marketplace: A Closet Dictator, in Nader, Ralph, Greider, Atwood, Margaret, Shiva, Vandana, Ritchie, Mark, Bery, Wendell, Brown, Jerry, Daly, Herman, Lee, Thea, Khor, Martin, Phillips, David, Castaneda, Jorge, Heredia, Carlos, Morris, David, and Mander, Jerry, The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power, Earth Island Press, 1993, pp.23-25.

18 number of PTAs represents the most serious hazard to the continued existence of the international multilateral trading system. While working together to dispel what they would consider as the favorable myths that surround PTAs, members of this camp, above anything else, argue that PTAs will in the end curb more international trade than they create. For those in the second camp, PTAs represent little threat to the international trading system. In contrast with the first camp, second campers view PTAs as the building blocks of multilateral trade liberalization. Within this camp, it is generally agreed that preferential trade regimes eliminate most, if not all substantial barriers to trade between partner nations. Since members of this camp also believe that trade, whether interregional or international, raises income, it should not come as a surprise that PTAs in general are viewed as a productive vehicle for economic growth. As was mentioned in the literature review, members of the third camp oppose PTAs and all other vehicles of the globalization phenomenon. They share the common belief and understanding that trade liberalization ultimately encourages adverse affects for workers, culture, and the state. Another argument of those within the third camp contends that trade regimes such as PTAs work to create circumstances of debt bondage, which in their opinion equate to generational indebtedness. Research Design As was shown by the literature review, little research has been conducted pertaining to the problems associated with sub-Saharan African trade with the U.S. While much has been written on Latin Americas’ trade agreements with the U.S., namely, NAFTA and the proposed FTAA, scholarly work on the African Growth & Opportunity Act (AGOA), the primary vehicle used to promote trade between the U.S. and the nations of sub-Saharan Africa, is seriously lacking.41 In the absence of such research, it is difficult to develop a complete understanding of the current trade realities that exist between these two trading partners.

41 For a more in depth sample of recent scholarly books on NAFTA, and the proposed FTAA, see Daniel Lederman, William F. Maloney, and Luis Serven’s, Lessons from NAFTA for Latin America and the Caribbean, Stanford Economics and Finance, 2005; Daniel C. Esty’s, Greening the Americas : NAFTA's lessons for hemispheric trade, MIT Press, 2002, Antoni Estevadeordal’s, Integrating the Americas : FTAA and beyond, Harvard University Press, 2004; and Paulo Vizentini and Marianne Wiesebron’s, Free trade for the Americas?: the United States’ push for the FTAA agreement, Zed Books, 2004.

19 Hence, it is the purpose of this study to examine at length the trade relationship between the United States and sub-Saharan Africa; a relationship that since 2000 has largely been shaped by AGOA. Specifically, the troubles that sub-Saharan African nations have faced while trying to take advantage of their preferential access to the vast American market will be examined by way of the Ghanaian implementation of AGOA.42 Research Approach This research uses a descriptive case study to examine the troubles Ghana has encountered while trying to implement AGOA.43 Arend Lijphart writes that descriptive case studies are appropriate when one wishes to investigate phenomena that have not yet been explored by careful empirical examination. Lijphart concludes that descriptive case studies possess great utility for basic data-gathering operations, and thus could potentially lead to theory building.44 The trade related agencies examined here include the Ghanaian Ministry of Trade & Industry (GMTI), National AGOA Secretariat (Ghana), Ghanaian Chamber of Commerce and Industry (GNCCI), Federal Association of Ghanaian Exporters (FAGE), Sigma One Corporation, U.S. Embassy (Ghana), and the U.S. Chamber of Commerce (Ghana). As will be discussed in later chapters, each of these agencies plays a significant role in the day to day workings of the U.S./Ghanaian trade relationship. Data Collection The data for this case study was collected primarily from personal interviews that the author conducted with officials from the organizations mentioned above. In some cases, interviews were supplemented with information from the official records of both the Ghanaian and U.S. governments. The interviews were conducted in June and July of 2005 by telephone, focusing on the personal experiences of the respondents’ attempts to implement AGOA in Ghana.45

42 Ghana is a relatively small nation located in the heart of West Africa. 43 The author is unaware of any scholarly work examining the impact of AGOA in sub-Saharan Africa built around interviews involving governmental officials and representatives of the private sector. 44 Lijphart, Arend, Comparative Politics and Comparative Method, American Political Science Review 65, September 1971, pp.691-693. 45 The author obtained permission from the Miami University Office for the Advancement of Research and Scholarship to conduct research involving human subjects in May of 2005.

20 Eight clusters of variables served as the focal point for the interviews that were conducted. These variable clusters were selected for the purposes of providing in depth information on the problems associated with the Ghanaian government, Ghanaian industries, and various U.S. efforts to make AGOA work in Ghana. The eight clusters of variables are as follows46: Procedural Questions—Explore the way in which Ghanaian officials perceive and react to AGOA. Knowledge Questions—Examines how well equipped Ghanaian officials are in understanding the intricacies of U.S. trade laws and practices, as well as all AGOA related rules and regulations. Assistance Questions—Seek to explore the degree of support the Ghanaian government offers its export community in conducting trade with the U.S. under AGOA. Burden Question—Seeks to measure the time and monies spent by the Ghanaian government concerning legal representation issues related to AGOA. Cooperation Questions—Investigates the degree to which Ghanaian officials assist the U.S. in its AGOA review mechanisms. Appeal Question—Measures the degree to which Ghanaian officials believe AGOA will substantially change their trade relationship with the U.S. Conformity Questions—Seek to examine the lengths to which the Ghanaian government is willing to undertake in order to ensure that AGOA is a success in Ghana. General Questions—Seek to obtain general information regarding the depth and intensity of the U.S./Ghanaian trade relationship. Chapter Outlines The coming pages are divided into three additional chapters. Chapter two examines the evolution and the makeup of AGOA. How did AGOA come into being? What is AGOA’s mandate? How long will it be in practice? What are its rules and regulations? In addition, chapter two also explores the impact that AGOA has had thus far on the trade relationship between the U.S. and sub-Saharan Africa on the whole.

46 Variable clusters were derived from research conducted by Benjamas Chinapandhu, Free Trade and Fair Trade: Antidumping and Countervailing Duty Measures In U.S.-Thai Trade Relations, 2002.

21 Chapter three investigates the problems Ghanaians have encountered thus far in their attempts to implement AGOA. It begins with a brief examination of the history of the trade relationship between the U.S. and Ghana. Following this, the key Ghanaian and American agencies associated with AGOA implementation are discussed. After which, the results of the above-mentioned survey will then be analyzed. The final chapter will discuss the conclusions one can draw from the analysis found in earlier chapters. The implications the Ghanaian case has for other sub-Saharan African nations currently experiencing difficulties implementing AGOA will be discussed as well. The research will then conclude with a brief discussion on potential avenues for future research.

22 CHAPTER ONE NOTES

1. U.S. State Department, AGOA III: The United States Africa Partnership Act of 2003, http://www.state.gov/e/rls/rm/2004/3077.htm. 2. Ruggiero, Renato, (Jeffrey J. Schott) Free Trade Agreements: US Strategies and Priorities, Institute for International Economics, Washington, DC. 3. World Bank, 2004, Global Economic Prospects 2005 (Washington, D.C.: World Bank). 4. Ramachandran, Anjali, Summary of UNCTAD’s Least Developed Country (LDC) Report 2002, http://icdasecretariat- docs.bravepages.com/icdalatest/reports/UNCTAD- LDCreport2002.htm. 5. Ben-Ari, Nirit, Poverty is Worsening in African LDCs, http://www.globalpolicy.org/socecon/develop/africa/2002/09ldcs.htm. 6. Global Growth Blog, WTO Commission Attacks ‘Spaghetti Bowl’ Deals, http://global-growth.blogspot.com/2005/01/wto-commission-attacks-spaghetti- bowl.html. 7. Krueger, Anne O., Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?, Journal of Economic Perspectives—Volume 13, Number 4—Fall 1999. 8. Bhagwati, Jagdish, Panagariya, Arvind, The Economics of Preferential Trade Agreements, AEI Press, Washington, D.C., 1996. 9. Bhagwati, Jagdish, Free Trade Today, Princeton University Press, Princeton, New Jersey, 2002. 10. Bhagwati, Jagdish, Krueger, Anne O., The Dangerous Drift to Preferential Trade Agreements, The AEI Press, Washington, D.C. 11. Cooper, Richard N., Comment, in Jeffrey J. Schott, Free Trade Agreements: US Strategies and Priorities, Institute for International Economics (IIE), Washington, D.C., April 2004. 12. Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford: Clarendon Press, 1976, pp. 511 and 514.

23 13. Chomo cites work completed by Jeffrey Frankel and David Romer in their 1999 American Economic Review article, Does Trade Cause Growth? 14. Chomo, Grace V., Free Trade Agreements Between Developing And Industrialized Countries: Comparing the U.S.-Jordan FTA With Mexico’s Experience Under NAFTA, U.S. International Trade Commission: Office of Economics Working Paper, January 2002. 15. Lawrence, Robert Z., Regionalism, Multilateralism, and Deeper Integration: Changing Paradigms for Developing Countries, in Mendoza, Miguel Rodriquez, Patrick Low, and Barbara Kotschwar (eds.), Trade Rules in the Making., Organization of American States (OAS)/Brookings Institution Press., Washington, D.C., 1999. 16. Hudgins, Edward L., Regional and Multilateral Trade Agreements: Complementary Means to Open Markets, Cato Journal. Vol.15. No.23. Fall/Winter 1995/96. 17. Bergsten, C. Fred, Open Regionalism: Working Paper 1997, Institute for International Economics. 18. Schott, Jeffrey J., Free Trade Agreements: Boon or Bane of the World Trading System?, in Jeffrey J. Schott, Free Trade Agreements: US Strategies and Priorities, Institute for International Economics, Washington, D.C., April 2004. 19. Irvin, Douglas A., Free Trade Under Fire, Princeton University Press, 2002. 20. Lusztig, Michael, The Limits of Protectionism: Building Coalitions for Free Trade, University of Pittsburgh Press, 2004. 21. Goldsmith, James, Interview: The Case Against GATT, http://multinationalmonitor.org/hyper/issues/1994/10/mm1094_06.html. 22. Nader, Ralph, Introduction: Free Trade & The Decline of Democracy, in Greider, William, Atwood, Margaret, Shiva, Vandana, Ritchie, Mark, Bery, Wendell, Brown, Jerry, Daly, Herman, Wallach, Lori, Lee, Thea, Khor, Martin, Phillips, David, Castaneda, Jorge, Heredia, Carlos, Morris, David, and Mander, Jerry, The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power, Earth Island Press, 1993.

24 23. Kennington, Alan, Why International Trade Is Bad, http://www.isometry.com/trade.html. 24. Wallach, Lori, Hidden Dangers of GATT and NAFTA, in Nader, Ralph, Greider, William, Atwood, Margaret, Shiva, Vandana, Ritchie, Mark, Bery, Wendell, Brown, Jerry, Daly, Herman, Lee, Thea, Khor, Martin, Phillips, David, Castaneda, Jorge, Heredia, Carlos, Morris, David, and Mander, Jerry, The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power, Earth Island Press. 25. Greider, William, The Global Marketplace: A Closet Dictator, in Nader, Ralph, Greider, Atwood, Margaret, Shiva, Vandana, Ritchie, Mark, Bery, Wendell, Brown, Jerry, Daly, Herman, Lee, Thea, Khor, Martin, Phillips, David, Castaneda, Jorge, Heredia, Carlos, Morris, David, and Mander, Jerry, The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power, Earth Island Press, 1993. 26. Lijphart, Arend, Comparative Politics and Comparative Method, American Political Science Review 65, September 1971. 27. World Bank, Data & Statistics, http://www.worldbank.org/data/countrydata/countrydata.html.

25 CHAPTER TWO

The Origins & Implementation of AGOA

We share the same goal—to forge a future of more openness, trade and freedom... The United States will work in partnership with African nations to help them build the institutions and expertise they need to benefit from trade. −U.S. President George W. Bush1

On May 18, 2000 President William J. Clinton, accompanied by members of the U.S. House of Representatives and various sub-Saharan African dignitaries in the Rose Garden of the White House, signed AGOA into law, the most significant trade bill in the history of U.S. trade relations with sub-Saharan Africa.2 The passage of AGOA represented for the Clinton Administration a culmination of a six year effort to promote the greater expansion of the U.S./sub-Saharan African trade relationship. President Clinton’s commitment to this goal was perhaps best surmised by the late Commerce Secretary Ron Brown, who in 1995, pronounced that the U.S. would no longer concede the African market to its former colonial powers.3 In 1993, the Clinton Administration’s policies toward sub-Saharan Africa were focused primarily around Operation Restore Hope, a bold initiative that was implemented by President George H.W. Bush in December 1992 at the behest of the American public, who, after viewing televised images of mass starvation, pressed the Bush Administration to bring relief to the Somali people who had found themselves marred by a seemingly endless civil war and famine. However, this all changed on October 3, 1993 when eighteen U.S. Marines were killed in the Somali capital of Mogadishu. The deaths of the Marines led to a national debate in which the critics of the Clinton Administration called into question the merit of any future political and/or military endeavors in the region.

1 AGOA.gov, President Bush’s Opening Remarks to The U.S.-sub-Saharan African Trade and Economic Cooperation Forum: October 29-30, 2001, http://www.agoa.gov/agoa_forum/kjr21300.PDF, 7/15/2005. 2 AGOA represents Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to further open their economies and build free markets. The Trade and Development Act of 2000 also included the United States-Caribbean Basin Trade Partnership Act (USCBTPA), which also sought to reduce or eliminate U.S. tariffs and quotas for goods from the Caribbean. 3 The Clinton Administration Record In sub-Saharan Africa, http://usinfo.state.gov/regional/af/record.htm, 7/11/2005. Secretary Brown made this statement when he led the U.S. delegation to the 1995 Africa- African American summit in Dakar, Senegal.

26 After almost a year of non-engagement, the Administration in the fall 1994 renewed its resolve to engage sub-Saharan Africa when it ushered in the first ever White House Conference on Africa. The objective of the Conference was to formulate a comprehensive policy towards the region that was based on mutual interests; interest that represented a clear break from previous policies that tended to view Africa only on a country by country, crisis by crisis, and conflict by conflict basis. Commenting at the Conference, President Clinton stated that his Administration would develop a policy toward sub-Saharan Africa that would seek “to unleash the human potential of the people of the African continent in ways that will lead to a safer and more prosperous world.” The President concluded his remarks by arguing that AGOA would lead to “a better life for them and a better life for us.”4 While 1996 saw the Administration’s first substantive engagement of Congress with early versions of AGOA, which was originally sponsored by Representative Jim McDermott (D-WA), it was not until 1998 that the first AGOA measure, (H.R. 1434), narrowly passed the House with a vote of 231-186. However, it ultimately died in the Senate.5 Despite strong pressure from the Clinton Administration and Congressional champions in the House, as well as a massive corporate lobbying campaign, it would take AGOA another year to pass the House in July 1999.6 AGOA’s arduous journey through the House was largely the response of staunch opposition by the U.S. based Africa advocacy organization TransAfrica labor groups such as the AFL-CIO trade union federation, the Sierra Club, Public Citizen, and members of the Congressional Black Caucus.7 Congressman Jesse Jackson, Jr. (D-IL), in speaking on the Caucus’s position, delivered perhaps the most scathing indictment on the proposed AGOA legislation in 2000 when he commented that:

4 Id. 5 The failure of H.R. 1434 to pass in the Senate was due in part to the lack of support for the Bill by prominent members of the Congressional Black Caucus; in particular, Reps. Maxine Waters (D-CA), John Lewis (D-GA), John Conyers (D-MI), Bobby Rush (D-IL), and Cynthia McKinney (D-GA) lobbied heavily against the passage of the Bill in both the House and Senate. 6 Public Citizen, The Supporters and Opponents of the NAFTA for Africa, http://www.citizen.org/trade/africa/hope/articles.cfm?ID=1640, 5/21/2005. The final House vote total on the AGOA legislation can be found on the website of the Office of The Clerk: U.S. House of Representatives at http://clerk.house.gov/evs/1998/roll047.xml. 7 The Congressional Black Caucus is an organization representing African-American members of the United States Congress.

27 We don’t need a deal between undemocratic and permanently entrenched kings and presidents-for-life in Africa and multinational businesses in the United States. . . .What do African-Americans and the common people of Africa, the most economically disenfranchised, get out of the deal? The current language suggests no relationship between development of business in Africa and the empowerment of African-American entrepreneurs, negotiators, lawyers, accountants and brokers to facilitate that business.8

At issue for many of AGOA’s detractors was what AGOA did not speak to. In particular, AGOA’s original draft included sections pertaining to slavery and developmental aid. These measures were implemented in order to ensure that AGOA would offer development assistance to the sub-Saharan African region, and to ensure that slavery in any form would not be tolerated. However, by 2000, the final draft of AGOA made no mention of these two issue areas. By the spring 2000, rather than strengthening non-binding language which recognized the effectiveness of developmental aid and the need for its future funding, the entire section on development assistance was expunged from the bill. The provision suggesting that nations not cooperating with efforts to eradicate slavery not be eligible for benefits under the bill was removed as well.9 In the end, despite the attempts of AGOA’s detractors to derail the Act’s passage, groups such as the African Coalition for Trade, Inc. (ACT) were successful in lobbying Congress to approve the trade Act.10 In the six years since it was enacted, AGOA has grown to become the benchmark of U.S. trade policy with sub-Saharan Africa. As such, it is the purpose of chapter two to examine both the structure and the record of the Act thus far. In particular, the proceeding sections of this chapter will elaborate on the process by which AGOA has been implemented in sub-Saharan Africa; the means by which sub-Saharan African nations are deemed eligible to receive AGOA benefits; the products presently covered by AGOA; AGOA success stories; and lastly, the chapter will conclude with an extensive examination of AGOA’s impact on the U.S./sub-Saharan African trade relationship.

8 Public Citizen, Meet The Opponents of The NAFTA for Africa Act, http://www.citizen.org/trade/africa/house_fight/articles.cfm?ID=1819, 5/21/2005. Congressman Jesse Jackson, with the assistance of labor, citizen and environment groups, and 75 other members of Congress drafted an alternative piece of legislation-the HOPE for Africa Act (H.R. 772)—that sought to focus U.S. Africa policy on debt relief, development assistance and social programs. That legislation, however, was never brought to the floor of the House for debate. 9 Public Citizen, The African Growth and Opportunity Act: From Bad To Worse, http://www.citizen.org/trade/africa/house_fight/african/articles.cfm?ID=6585, 7/18/2005. 10 The African Coalition for Trade, Inc. (ACT) is a non-profit, member-supported trade association dedicated to enhancing the opportunities for mutually beneficial trade between the United States and countries of sub-Saharan Africa.

28 Implementation

The approach that AGOA has adopted towards the accelerated growth and development of Africa and the integration of the continent into the world economy involves trade liberalization, enhanced market access, finance and investment. −Ambassador Vijay S. Makhan (African Union)11

The Office of the United States Trade Representative has over the last six years worked tirelessly on AGOA’s implementation by actively engaging Congress, sub- Saharan African governments, as well as various sectors of the international business community. One of the primary tools that the USTR has used in its efforts to implement AGOA in sub-Saharan Africa has been the U.S. sub-Saharan Africa Trade and Economic Forum, which was created in section 105 of AGOA.12 The Forum serves as the main vehicle for facilitating continuous dialogue between the U.S. and sub-Saharan African nations on issues such as trade, economics, and investment. The Forum, which is hosted by the U.S. Secretaries of State, Commerce, Treasury, and the Office of the U.S. Trade Representative, is required under AGOA to take place on an annul basis. AGOA also requires the President to summit an annual report to Congress that outlines U.S. trade and investment policies in sub-Saharan Africa, as well as the overall implementation of the Act. The inaugural meeting of the Forum, which was held in Washington, D.C. in October 2001, focused primarily on measures that both the U.S. and sub-Saharan African nations could jointly undertake in order to stimulate economic growth and trade, enhance the spread of democracy, and combat the deadly effects of HIV/AIDS.13 The inaugural Forum was considered by most observers to be a great success; the Forum received broad cabinet-level participation from the American delegation. Included in this delegation were President Bush, Secretary of State Colin Powell, Secretary of Treasury Paul O'Neill, Secretary of Commerce Donald Evans, Secretary of Agriculture Ann Veneman, U.S.

11 U.S. Department of State, African Union Official Values AGOA Approach to Development, http://usinfo.state.gov/regional/af/trade/a3011302.htm, 2/7/2003. 12 The preamble to Section 105 of AGOA instructs the President to convene annual high-level meetings between appropriate officials of the United States Government and officials of the governments of sub- Saharan African countries in order to foster close economic ties between the United States and sub-Saharan Africa. 13 A recap of the highlights from the first U.S.-sub-Saharan Africa Trade and Economic Forum can be found on the official AGOA website at http://www.agoa.gov/agoa_forum/agoa_forum.html.

29 Trade Representative Robert Zoellick, National Security Advisor Condoleezza Rice, USAID Administrator Andrew Natsios, and various members of Congress. Ministers from thirty-five of the eligible sub-Saharan African nations also participated in the Forum, along with representatives from various African regional organizations.14 During the second U.S. sub-Saharan Africa Trade and Economic Forum, which was held in Port Louis, Mauritius in January 2003, President Bush announced that he would ask Congress to extend AGOA beyond the year 2008.15 The President also revealed that the U.S. would devote $200 million to improve education and teacher training in the region. In addition, he also announced the formulation of a new educational program, Books for a Better Tomorrow. This program is intended to highlight the President’s commitment to developing good teachers and schools in sub- Saharan Africa by providing $30 million worth of books and school supplies for the continent.16 By the end of the second Forum in 2003, officials on both sides of the Atlantic seemed to be in agreement that the Form was fast becoming an invaluable resource for both parties in their mutual quest to maximize trade and investment interests. In terms of participation, the second Forum attracted over 450 participants, including 62 Ministers from 33 nations and 27 representatives from various sub-Saharan African regional organizations.17 USTR Robert Zoellick, in speaking on the success of the second Forum, took time in his closing remarks to mention how the Forum provided both U.S. and sub- Saharan African officials an excellent opportunity to take stock of AGOA’s achievements.18 The USTR also suggested that through productive cooperation, “we have made tremendous progress on AGOA implementation thus far”.19 The positive atmosphere that seemed to surround the second Forum was also expressed by Jaya Cuttaree, Minister of Trade & Industry for the Republic of Mauritius, when in his closing

14 The Office of the U.S. Trade Representative, 2002 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Second of Eight Annual Reports ( May 2002), p.73. 15 A recap of the highlights from the second U.S.-sub-Saharan Africa Trade and Economic Forum can be found on the official AGOA website at http://www.agoa.gov/agoa_forum/agoa_forum2.html. 16 U.S. Department of State, Trade and Markets Key to Africa Prosperity, Bush Says, http://usinfo.state.gov/regional/af/trade/a3011501.htm, 2/07/2003. 17 The Second US-SSA AGOA Forum, Participants, http://www.agoa.mu/, 5/21/2005. 18 USTR Robert Zoellick, 2003 AGOA Forum: Closing Remarks, 01/17/2003. 19 Id.

30 remarks he suggested that the Forum had been a positive event, and that it had also given a strong impetus for the sustained U.S./sub-Saharan African partnership for trade and development.20 Perhaps one of the more significant aspects of the second AGOA Forum was that it provided the first opportunity for government delegates and representatives of the NGO community to enter into serious dialogue regarding the generation of new ideas on how to make the benefits of AGOA more accessible to businessmen/women in sub-Saharan Africa. In total, more than 150 participants attended the event, including officials from the U.S., various nations of sub-Saharan Africa, representatives of the African Union, and the Foundation for Democracy in Africa. In total, the AGOA-NGO Forum produced some 55 recommendations aimed at improving the general accessibility of AGOA to sub- Saharan African exporters. Paramount among these recommendations was a call for the extension of AGOA beyond its 2008 end-date so that African nations could be allotted more time to build the capacity needed to withstand global competition.21 The third AGOA Forum, like the first Forum, took place in Washington, D.C. in December 2003.22 The theme for the third Forum, Building Trade, Expanding Investment, highlighted the importance that the third Forum placed in promoting the benefits associated with trade and investment through AGOA to the American business community. The U.S., under the Secretary for Economic, Business, and Agricultural Affairs, Alan Larson, argued that Africa’s two percent share of total global trade represents a lost opportunity for American investors during his comments to the Private Sector Forum.23 Former U.S. Secretary of State, Colin Powell, also referenced this theme when he reminded Forum attendees in his opening remarks that Africa represents the last great emerging market of the world, hence, American investors must take notice.24

20 The Second US-SSA AGOA Forum, Closing Remarks: The Hon. Minister J.K. Cuttaree, http://www.agoa.mu/speech/speech17.htm, 5/21/2005. 21 The Second US-SSA AGOA Forum, NGO Event, http://www.agoa.mu/speech/speech14.htm, 5/21/2005. 22 A recap of the highlights from the third U.S.-sub-Saharan Africa Trade and Economic Forum can be found on the official AGOA website at http://www.agoa.gov/agoa_forum/agoa_forum3.html. 23 U.S. Department of State, AGOA Successes and Challenges in Target Sectors, http://www.state.gov/e/rls/rm/2003/26969.htm, 7/15/2005. 24 U.S. Department of State, Remarks at The United States Sub-Saharan Africa Trade and Economic Cooperation Forum, http://www.state.gov/secretary/former/powell/remarks/2003/26990.htm, 7/15/2005.

31 The Fourth AGOA Forum, which was held in Dakar, Senegal July 18-19 2005, unlike the previous three Forums, generated substantial pre-Forum publicity and excitement.25 In preparation for the Forum, the U.S., along with their sub-Saharan African partners supported eleven websites for the purposes of disseminating logistical and policy information concerning the fourth Forum. The theme for the fourth Forum, Expanding and Diversifying Trade to Promote Growth and Competitiveness, highlighted the major priority of the fourth Forum— encouraging sub-Saharan African countries to diversify their exports by taking advantage of the broad range of products eligible for preferential treatment through AGOA. The official website of the fourth AGOA Forum indicated that the goals of the forum were to: Foster greater interest and investment in sectors other than textiles and apparel; provide practical information about how to meet U.S. export requirements and sell successfully into U.S. markets; and encourage those countries that have yet to take advantage of the Act's benefits to do so.26

As in previous years, the 2005 Forum included a ministerial meeting, private sector forum, a trade exposition, and for the first time, a civil society forum. The new civil society forum, which was organized by the AGOA Civil Society Network, explored ways in which sub-Saharan African civil society can support diverse efforts to help the nations of sub-Saharan Africa to benefit from AGOA. The fifth and most recent AGOA Forum, which ran from June 6-7, 2006, in Washington, D.C., focused primarily on the three independent forums, the private sector, civil society and the Ministerial. The private sector forum, which was sponsored by the Corporate Council on Africa (CCA), covered several important topics, including African textiles and apparel trade; growing agricultural trade under AGOA; increasing U.S. private sector investment in Africa; infrastructure development; and financing investment and trade.27 In conjunction with the Forum, CCA launched a special edition of its quarterly magazine, The Africa Journal, at a special press conference. The special

25 A recap of the highlights from the fourth U.S.-sub-Saharan Africa Trade and Economic Forum can be found on the official AGOA website at http://www.agoa.gov/agoa_forum/agoa_forum4.html. 26 Dakar 2005, 2005 U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, http://www.agoaforum.org/Information.asp?hdnGroupID=21&hdnLevelID=0&hdnlocaleid=2, 7/15/2005. 27 Corporate Council on Africa, CCA Hosts Major Forum on the Private Sector and AGOA, http://www.africacncl.org/(q0rpgezoixleie45rwpelkec)/Events/AGOA_2006.asp, 7/12/2006. The CCA, which was established in 1992, is a non-profit, non-partisan organization of American companies dedicated to promoting grade and investment ties between the U.S. and Africa. The official 2006 AGOA Economic Forum brochure can be found at: http://www.agoa.gov/agoa_forum/AGOA%20Forum%202006%20Brochure.pdf.

32 edition, which is titled, AGOA Private Sector Report: Promoting Trade and Investment in Sub-Saharan Africa: Opportunities, Obstacles, and Realities, was passed out to all forum attendees.28 The civil society forum consisted of a two day program of plenary sessions, panels and workshops, including two sessions on Capitol Hill with key members of Congress and their staff. Forum attendees included delegates from various U.S. advocacy and development organizations, civic leaders and small business owners from all across Africa. The forum’s theme, The AGOA We Have versus The AGOA We Need, highlighted panelist discussions which focused on the impact of AGOA's first five years on economic growth and poverty reduction on the sub-continent. One of the forum’s panelists, Kwame Amoako Tuffuor (Ghanaian delegate), suggested that “the AGOA we need should provide commodity producers with skills- building and technical assistance." He further added that Africans need financial assistance for small and medium enterprises to expand production and enhance product quality "so that the goods we supply can meet global market standards and be competitive." Another forum participant, Paul Mugambwa (Ugandan delegate), in agreeing with Mr. Tuffuor’s comments, stated that “without this, AGOA's promise to help Africans eradicate poverty cannot be fulfilled."29 The announcement of the creation of the AGOA Civil Society Group was perhaps the most action taken during the civil society forum. The group is made up of non- governmental organizations, small to medium-sized business representatives, chambers of commerce, and other groups in the United States and Africa that are interested in the successful application of AGOA for the benefit of the Americans and Africans. The aim of the group is to facilitate discussion across a broad spectrum of civil society stakeholders on the role of AGOA in promoting sustainable growth, in both rural and

28 The Africa Journal attempts to raise Africa's profile in the U.S. as a business destination by highlighting important trade policy and political developments in Africa. 29 Bread for the World, 2006 AGOA Civil Society Forum, http://www.bread.org/learn/global-hunger- issues/agoa-forum-2006/, 7/12/2006. Bread for the World is a U.S. Christian citizens’ movement against hunger; each year, the organization successfully mobilizes hundreds of individuals and churches to pressure Congress to take action on issues related to global hunger.

33 urban areas, and poverty reduction, and to catalyze sustained action on the part of civil society to influence policy.30 U.S. Agriculture Secretary Mike Johanns was the keynote speaker for the breakfast session of the Ministerial forum. In his opening remarks to the forum, Sec. Johanns announced that after careful consideration of African of complaints regarding the complexity and un-timeliness of the U.S. system for approving fresh horticultural products after last year’s meeting in Senegal, that the Animal and Plant Health Inspection Service, or APHIS, will shortly propose new procedures to shorten the regulatory approval time for some products that would be new to the U.S. market. He suggested that “new procedures will simplify and quicken the process for approving new imports while still allowing public participation in the rulemaking process.”31 The Secretary also mentioned the launch of several new United States Dairy Association (USDA) initiatives in Africa, such as increased food aid, avian influenza emergency training, and increased technical assistance, which includes agricultural training. Sec. Johanns indicated that the most extensive technical assistance program will focus on strengthening plant health system and pest risk assessments. According to the Secretary: As you know, before your countries can export fresh agricultural products, you must be able to meet international phyto-sanitary standards, which are not only important for exports; they also will help protect your own crops from foreign pests and diseases. That's why we're pursuing an innovative effort to help African countries meet the challenge of exporting their products.32

CCA concluded the fifth AGOA forum by hosting the Ministerial Luncheon, which included participants from Ministers of Trade from the AGOA-eligible African countries, including the Ghanaian and South African Ministers. The featured speakers for this session were South Africa’s Minister of Trade and Industry, The Honorable Mandisi Mpahlwa; Holly Vineyard, Deputy Assistant Secretary of Commerce for Africa,

30 U.S. Department of State, African Growth and Opportunity Act, The Private Sector and Trade: Powering African Growth, http://www.agoa.gov/agoa_forum/State%20Dept%20AGOA%20Forum%202006%20Summary.pdf, 7/12/2006. 31 United States Department of Agriculture, TRANSCRIPT OF REMARKS BY AGRICULTURE SECRETARY MIKE JOHANNS AT THE MINISTERIAL BREAKFAST FOR THE AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA) FORUM, WASHINGTON, DC -- JUNE 7, 2006, http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2006/06/0199.x ml, 7/12/2006. 32 Id.

34 Middle East, and South Asia; and Ken Ofori-Atta, Chairman of DATABANK, Ghana. Minister Mpahlwa, who spoke on how infrastructure impacts all areas of business, argued that “infrastructural development should be the foremost priority for all stakeholders in Africa’s economic development.” Deputy Assistant Secretary Vineyard also underscored the need to address infrastructure related problems. She stated that “the U.S. is a time- sensitive market and African producers need to further develop their capacity in order to serve the U.S. market.” Mr. Ofori-Atta concluded the session by speaking on the many opportunities available for American businesses wishing to conduct business in Africa.33 Since its enactment in 2000, AGOA has undergone two significant legislative overhauls: AGOA II (2002) and AGOA III (2004). On August 6, 2002, President Bush signed the Trade Act of 2002 (AGOA II), which substantially expanded preferential access for imports from beneficiary sub-Saharan African countries. AGOA II was written in order to improve both the operation of AGOA I, and sub-Saharan African utilization of the AGOA program. Hence, AGOA II clarifies and narrowly expands the trade opportunities for sub-Saharan African countries under AGOA, and encourages more investment in the region. AGOA II also provides additional Congressional guidance to the Bush Administration on how to best administer the textile provisions of the Act.34 The new AGOA enhancements include revisions requested by many sub-Saharan African countries.35 These enhancements were intended to maximize the full benefits of AGOA. Specifically, the AGOA II legislation introduced the following five new provisions to the original AGOA legislation: ƒ To clarify that preferential treatment is provided to knit-to-shape articles or "wholly assembled" apparel articles assembled from the U.S. or from another sub- Saharan African beneficiary country. AGOA allows knit-to-shape articles to qualify, but the knit-to-shape components have to be from the U.S. or from another sub-Saharan African beneficiary country, or be knit-to-shape from yarn in an eligible sub-Saharan African country;

33 See Bread for the World, supra note 29. Databank was founded in April 1990 to provide corporate and public finance advisory services to companies in Ghana. Its mission is to provide innovative and responsive corporate finance, brokerage, fund management and research services to local and foreign individuals, multinational companies, institutions, and portfolio investors for the ECOWAS sub-region. 34 AGOA.gov, Summary of AGOA II, http://www.agoa.gov/agoa_legislation/agoa_legislation2.html, 5/21/2005. 35 Discussions during the first AGOA Forum reveled that amendments to the original AGOA legislation would be in order to improve the ability of sub-Saharan African nations to utilize the program.

35

ƒ To make eligible for preferences so called "hybrid" apparel articles (that is, articles containing both U.S. and sub-Saharan Africa beneficiary components and/or articles containing both fabric and knit to shape components). In essence, this provides preferential treatment for apparel articles that are cut both in the United States and beneficiary countries;

ƒ To make a technical correction to allow sub-Saharan African producers to take advantage of the AGOA benefit for merino wool sweaters;

ƒ To "double" the apparel cap for apparel made in Africa from regional fabric made with regional yarn from 3 to 7 percent over eight years. In addition, the Act doubles the "cap", or annual quantitative limit, on apparel articles assembled in beneficiary countries from regional fabric. However, it does not increase the cap for apparel assembled in lesser developed beneficiary countries from third country fabric (fabric formed outside the United States or a beneficiary country); and

ƒ To allow Namibia and Botswana to benefit from the "lesser developed beneficiary sub-Saharan African country" provision. The Trade Act also grants AGOA lesser developed beneficiary country status to Botswana and Namibia, allowing producers there to use third country fabric in qualifying apparel.36

Table 4 outlines these new provisions and shows the difference between the relevant sections of AGOA I and AGOA II.

Table 4

AGOA—Before and After Category AGOA I AGOA II Knit-to-Shape The term "fabric" is interpreted by Knit-to-shape apparel US Customs as excluding qualifies for AGOA components that are "knit-to-shape" benefits. (i.e. components that take their shape in the knitting process, rather than being cut from a bolt of cloth). Lesser Developed Countries Duty-free treatment for apparel LDC apparel eligible articles assembled in less developed for duty-free treatment countries in sub-Saharan Africa, regardless of origin of regardless of origin of fabric. fabric and regardless of origin of yarn. Botswana and Namibia Not treated as less developed Specially designated

36 See Summary of AGOA II, supra note 34.

36 countries because per capita gross as less developed national product (GNP) in 1998 countries. exceeded $1 500. Hybrid Cutting Under US Customs interpretation, Hybrid cutting (i.e. cutting of fabric must occur either cutting that occurs in US or AGOA countries, but not both in US and in both. AGOA countries) does not render fabric ineligible. Volume cap on duty-free Applicable percentages increase Applicable treatment for apparel made through October 1, 2007. percentages doubled. from fabric made in AGOA region or, for lesser developed beneficiary countries from fabric made anywhere. Source: AGOA.info-website: http://www.agoa.info/index.php?view=about&story=amend_agoa, 7/15/2005.

On July 13, 2004, President Bush signed the third AGOA legislation into law (AGOA III). AGOA III represents the second renewal of the original AGOA Act. In his remarks at the signing of the AGOA Acceleration Act of 2004 (AGOA III), President Bush noted that AGOA has brought gains to both African exporters and to U.S. businesses.37 AGOA III introduced several key new provisions to the original AGOA legislation, as well as to AGOA II. Paramount among the new provisions was the decision of the U.S. Congress to extend AGOA to 2015; previously, AGOA was designated to end in 2008. The significance surrounding the extension of AGOA was perhaps best captured by Erik Autor, Vice-President of the National Retail Federation, who commented that: Signing AGOA III into law will end the uncertainty that has surrounded this program for some time now. Retailers had begun to cancel apparel orders from African factories and thousands of people were being thrown out of work as trade shifted back to Asia; all because no one knew whether key provisions of AGOA would still be effective this fall (2004). Enactment of this bill puts an end to those worries.38

37 Bridges Weekly Trade News Digest, AGOA III Allows Africa’s Trade Benefits In The US To Continue, http://www.ictsd.org/weekly/04-07-14/story1.htm, 5/21/2005. 38 Forbes.com, Retailers Welcome Signing of AGOA Extension, http://www.forbes.com/prnewswire/feeds/prnewswire/2004/07/13/prnewswire200407131124PR_NEWS_B _NET_DC_DCTU047.html, 7/16/2005.

37 Besides AGOA’s extension to 2015, the AGOA III legislation also introduced numerous other provisions to the original AGOA legislation, as well as AGOA II:

ƒ Extends third country fabric provision for three years, from September 2004 until September 2007, including a phase down in year three. The cap would remain at the full current level available in years one and two. In the third year, the cap would be phased down by 50 percent.

ƒ Includes a statement of Congressional policy that textile and apparel provisions under the program should be interpreted in a broad and trade-expanding manner to maximize opportunities for imports from Africa, accompanied by minor technical corrections to reverse restrictive interpretations by Customs officials. These minor technical corrections include a modification to the rule of origin to allow articles assembled either in the United States or sub-Saharan Africa to qualify for AGOA treatment (hybrid).

ƒ Expands current eligibility to allow non-AGOA produced collars, cuffs, drawstrings, padding/shoulder pads, waistbands, belts attached to garments, straps with elastic, and elbow patches for all import categories to be eligible. Also included is the continued use of fabric from AGOA countries that also become free trade partners with the United States.

ƒ Increases the De Minimis Rule from its current level of seven percent to 10 percent. This rule states that apparel products assembled in sub-Saharan Africa which would otherwise be considered eligible for AGOA benefits but for the presence of some fibers or yarns not wholly formed in the United States or the beneficiary sub-Saharan African country will still be eligible for benefits as long as the total weight of all such fibers and yarns is not more than a certain percent (currently seven percent) of the total weight of the article.

ƒ Includes findings and statements of policy about the benefits of AGOA to Africa and supporting various sub-Saharan Africans efforts such as reducing poverty, promoting peace, attracting investment and trade, and fighting HIV-AIDS.

ƒ Provides a Sense of the Congress that Africans should support WTO negotiations and trade liberalization.

ƒ Expands the current "folklore" AGOA coverage to include certain machine-made ethnic printed fabric made in sub-Saharan Africa or the United States.

ƒ Encourages bilateral investment agreements.

ƒ Directs the Administration to implement an interagency trade advisory committee.

38 ƒ Encourages the development of infrastructure projects that increase trade capacity through the ecotourism industry.

ƒ Directs the President to assign personnel for the purpose of providing agricultural technical assistance to select AGOA countries and advising them on improvements in their sanitary and phyto-sanitary standards to help them meet U.S. requirements.39

ƒ Promotes investment in infrastructure projects that support the development of land transport, roads, railways, ports, the expansion of modern information and communication technologies, and agriculture.

ƒ Facilitates increased coordination between customs services at ports and airports in the United States and Sub-Saharan countries to reduce time in transit and increase efficiency and safety procedures.40

Spearheading the passage of the AGOA III legislation was the AGOA III Action Committee, a coalition of businesses and civil society groups. Commenting on the strong U.S. support for AGOA III, Rosa Whitaker (Mother AGOA), the Committee's co-chair and former Assistant USTR for Africa, stated that “minds have met on the moral imperative of drawing sub-Saharan Africa into the mainstream of the modern global economy.”41 Another member of the AGOA III Action Committee, USTR Robert Zoellick, in speaking on the implications of the passage of AGOA III argued the following: This is about, frankly, the jobs, the opportunity and the hope that it creates in Africa. I have seen it so many ways in Africa. It has just given a whole reorientation to people's mindset about what is possible. Passage of the AGOA III legislation, he said, "is part of empowering people" to enable Africa to take part in the global trading system.42

39 Sanitary and phyto-sanitary standards refer to government’s use of scientific based regulations, rules, and procedures to safeguard public health. Sanitary and phyto-sanitary food safety measures serve that purpose and, in addition, establish and maintain trust of consumers in the smooth working of food markets. In the course of economic development, sanitary and phyto-sanitary regulations tend to increase in complexity, as consumers and producers become more demanding with respect to food safety and environmental attributes while at the same time being more capable of paying for the higher costs that additional production requirements and controls entail. 40 AGOA.gov, Summary of AGOA Acceleration Act of 2004 -- AGOA III, http://www.agoa.gov/agoa_legislation/agoa_legislation3.html, 5/21/2005. 41 See Bridges Weekly Trade News Digest, supra note 37. The AGOA III Action Committee is made up of three sectoral working groups: agriculture, export credit agencies, and textiles and apparel. Another four working group’s focus on advocacy and outreach, the executive branch, Congress, the media and sub- Saharan African countries. 42 USINFO.STATE.GOV, Passage of AGOA III Legislation Sends Good Signal to Africa, http://usinfo.state.gov/xarchives/display.html?p=washfile- english&y=2004&m=June&x=20040625192556WCyeroC0.8061792&t=livefeeds/wf-latest.html, 7/16/2005.

39 Eligibility

Many of the countries that are eligible for AGOA are doing very well, and we don't think that there are any problems. However, for some of them, they may have some issues that they need to look at. We keep our eyes on these kinds of things. And we let them know, we say, Hey, you've got to make sure that these things get resolved so that people don't start to think whether you should be eligible. −Assistant USTR (Africa) Florizelle Liser43

President Clinton initially issued a proclamation on October 2, 2000 designating 34 countries in sub-Saharan Africa eligible to receive the trade benefits of AGOA. While it is the intent of the U.S. Government to allow for the largest number of sub-Saharan African nations to take part in the opportunities offered them through AGOA, in the six years since President Clinton’s proclamation, only 37 of the possible 48 nations are deemed AGOA eligible. These nations include: Angola, Benin, Botswana, Burkina Faso, Cameroon, Cape Verde, Chad, Republic of Congo, Democratic Republic of Congo, Djibouti, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, and Zambia. With regards to country eligibility, various nations in the region have over the past five years gained and lost their preferential standing through AGOA. On January 18, 2001, Swaziland was designated as the 35th AGOA eligible country, and on May 16, 2002, Côte d'Ivoire was designated the 36th AGOA eligible country. On January 1, 2003 The Gambia and the Democratic Republic of Congo were designated the 37th and 38th AGOA eligible nations; in early January 2004, Angola was designated AGOA eligible as well. However, on that very same day, President Bush removed the Central African Republic and Eritrea from the list of eligible nations.44 In early December of 2004, the

43 allAfrica.com, AGOA Key To An Expanding Relationship with Africa, Says Top U.S. Trade Aide, http://allafrica.com/stories/200407020885.html, 7/16/2005. 44 The Central African Republic was declared AGOA ineligible for reasons largely related to the March 2003 military coup d’etat in which General Francois Bozize (now President Bozize) seized power from the democratically elected President Ange-Felix Patasse, suspended the constitution, and declared himself president. Eritrea was declared AGOA ineligible on account of its dismal human rights record and inability to implement economic and political reforms.

40 President designated Burkina Faso AGOA eligible; he then removed Côte d'Ivoire from the list of eligible nations in January of 2005.45 The criteria for country eligibility are designed to help attract trade and investment to the region. AGOA mandates that all nations designated as beneficiaries to the Act to undergo an annual review of their status, this is to ensure that all eligibility requirements are being implemented, and as was alluded to in the previous paragraph, nations upon their review, may either gain or loose their benefits during this review process.46 It should also be noted that the eligibility criteria for the Generalized System of Preferences (GSP) and AGOA significantly overlap one another, thus, sub-Saharan African nations must be GSP eligible in order to be AGOA eligible.47 While GSP eligibility does not imply AGOA eligibility, the majority (45 out of 48) of sub-Saharan African countries are currently GSP eligible.48 Tables and 5 and 6 display both the general criteria list and the discretionary criteria list for country eligibility under the U.S. GSP.

Table 5

Criteria For Eligibility Under GSP 1) A GSP beneficiary may not be a Communist country, unless such country receives Normal Trade Relations (NTR) treatment, is a WTO member and a member of the International Monetary Fund (IMF), and is not dominated by international communism. 2) A GSP beneficiary may not be a party to an arrangement of countries nor

45 AGOA.gov, General Country Eligibility Provisions, http://www.agoa.gov/eligibility/country_eligibility.html, 5/21/2005. Côte d'Ivoire was declared AGOA ineligible due to the lack of progress on key economic reforms and the Ivorian government’s decision to unilaterally violate the UN monitored cease-fire in November 2004 between the government-controlled south and the rebel-controlled north. 46 USTR Robert Zoellick, 2003 AGOA Forum: Closing Remarks, 01/17/2003. 47 The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world. At present, GSP provides preferential duty-free entry for more than 4,650 products from 144 designated beneficiary countries and territories. The GSP program was instituted on Jan. 1, 1976, and authorized under the Trade Act of 1974 for a 10-year period. It has been renewed periodically since then, most recently in 2002, when President George Bush signed legislation that reauthorized the continuation of the program through 2006. 48 The complete list of the forty-five sub-Saharan African nations that are currently GSP eligible can be on the website of the USTR at http://www.ustr.gov/assets/Trade_Development/Preference_Programs/GSP/asset_upload_file90_5432.pdf.

41 participate in actions the effect of which are (a) to withhold supplies of vital commodity resources from international trade or to raise the price of such commodities to an unreasonable level and (b) to cause serious disruption of the world economy. 3) A GSP beneficiary may not afford preferential treatment to products of a developed country that has, or is likely to have, a significant adverse effect on United States commerce. 4) A beneficiary may not have nationalized, expropriated or otherwise seized property of U.S. citizens or corporations without providing, or taking steps to provide, prompt, adequate, and effective compensation, or submitting such issues to a mutually agreed forum for arbitration.

5) A GSP beneficiary may not have failed to recognize or enforce arbitral awards in favor of U.S. citizens or corporations. 6) A GSP beneficiary may not aid or abet, by granting sanctuary from prosecution, any individual or group that has committed an act of international terrorism. 7) A GSP beneficiary must have taken or is taking steps to afford internationally recognized worker rights, including 1) the right of association, 2) the right to organize and bargain collectively, 3) freedom from compulsory labor, 4) a minimum age for the employment of children, and 5) acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health. 8) A GSP beneficiary must implement any commitments it makes to eliminate the worst forms of child labor. Source: The Office of the U.S. Trade Representative, 2005 U.S. Generalized System of Preferences Guidebook, http://www.ustr.gov/assets/Trade_Development/Preference_Programs/GSP/asset_upload_file267_8359.pdf , 01/19/2006.

Table 6

Discretionary Criteria For Eligibility Under GSP 1) An expression by a country of its desire to be designated as a GSP beneficiary country. 2) The level of economic development, including per capita GNP, the living standards of its inhabitants, and any other economic factors that the President deems appropriate. 3) Whether or not other major developed countries are extending generalized preferential tariff treatment to such country. 4) The extent to which such country has assured the United States that it will provide equitable and reasonable access to its markets and basic commodity resources and the extent to which it has assured the United States it will refrain from engaging in unreasonable export practices. 5) The extent to which such country provides adequate and effective

42 protection of intellectual property rights, including patents, trademarks, and copyrights. 6) The extent to which such country has taken action to reduce trade distorting investment practices and policies, including export performance requirements, and to reduce or eliminate barriers to trade in services. 7) Whether such country has taken or is taking steps to afford internationally recognized worker rights, including a) the right of association, b) the right to organize and bargain collectively, c) freedom from compulsory labor, d) a minimum age for the employment of children, and e) acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health. Source: The Office of the U.S. Trade Representative, 2005 U.S. Generalized System of Preferences Guidebook, http://www.ustr.gov/assets/Trade_Development/Preference_Programs/GSP/asset_upload_file267_8359.pdf , 01/19/2006.

As was inferred in preceding paragraphs, the White House plays a significant role in the determining sub-Saharan African countries AGOA eligibility status.49 In order for sub-Saharan African nations to be considered beneficiaries of AGOA, the President must take into account several considerations. AGOA authorizes the President to examine if whether particular nations have established, or are making continual progress toward establishing the following: market-based economies; the rule of law and political pluralism; elimination of barriers to U.S. trade and investment; protection of intellectual property; efforts to combat corruption; policies to reduce poverty, increasing availability of health care and educational opportunities; protection of human rights and worker rights; and elimination of certain child labor practices. The Trade Policy Staff Committee (TPSC), which is chaired by the USTR, assists the President in gathering information related to these and other areas of concern encompassing the AGOA eligibility process.50 In addition, AGOA declares that beneficiary nations must not engage in activities that undermine either the national security or foreign policy interests

49 The eligibility criteria under AGOA are set forth in section 104(a) of AGOA and sections 502(b) and (c) of the Trade Act of 1974, as amended (containing the GSP eligibility criteria). 50 In making their recommendations to the President concerning the eligibility status of sub-Saharan African nations under AGOA, the TPSC draws on information from various public sources including NGOs, the private sector, and prospective beneficiary governments.

43 of the U.S., engage in gross violations of internationally–recognized human rights law, or provide support for acts of international or domestic terrorism.51 The eligibility criteria for the AGOA program were developed in consultation with the nations of sub-Saharan Africa. These criteria reflect the belief shared by both the Clinton and Bush Administrations—that increased market access to the U.S. through AGOA will only generate sustained economic growth and development for the countries of sub-Saharan Africa if they are willing to implement the appropriate domestic policies. To put another way, the AGOA eligibility criteria constitute best practice policies. It is the hope of officials in both the U.S. and sub-Saharan Africa that these policies will ultimately lead to the expansion of greater trade, investment, and prosperity. Table 7 below displays the list of current AGOA eligible countries and the effective date of their eligibility.

Table 7

AGOA Eligibility Status

COUNTRY DATE DECLARED AGOA ELIGIBLE (Republic of) Angola 30 December 2003 (Republic of) Benin 02 October 2000 (Republic of) Botswana 02 October 2000 (Republic of) Cameroon 02 October 2000 (Republic of) Cape Verde 02 October 2000 (Republic of) Chad 02 October 2000 (Republic of) Congo 02 October 2000 (Republic of) Côte d'Ivoire 16 May 2002 (Democratic Republic of) 31 December 2002 Congo (Republic of) Djibouti 02 October 2000 Ethiopia 02 October 2000 Gabonese (Republic) 02 October 2000 The Gambia 31 December 2002 (Republic of) Ghana 02 October 2000

51 See AGOA.gov: General Country Eligibility Provisions, supra note 45. The complete list of AGOA eligibility criteria is located in Annex B of the 2005 Comprehensive Report of U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Fifth of Fifteen Annual Reports ( May 2005).

44 (Republic of) Guinea 02 October 2000 (Republic of) Guinea-Bissau 02 October 2000 (Republic of) Kenya 02 October 2000 (Kingdom of) Lesotho 02 October 2000 (Republic of) Madagascar 02 October 2000 (Republic of) Malawi 02 October 2000 (Republic of) Mali 02 October 2000 (Islamic Republic of) 02 October 2000 Mauritania (Republic of) Mauritius 02 October 2000 (Republic of) Mozambique 02 October 2000 (Republic of) Namibia 02 October 2000 (Republic of) Niger 02 October 2000 (Federal republic of) Nigeria 02 October 2000 (Republic of) Rwanda 02 October 2000 (Democratic of Republic of) 02 October 2000 Sao Tome and Principe (Republic of) Senegal 02 October 2000 (Republic of) Seychelles 02 October 2000 (Republic of) Sierra Leone 23 October 2002 (Republic of) South Africa 02 October 2000 (Kingdom of) Swaziland 02 October 2000 (United Republic of) Tanzania 02 October 2000 (Republic of) Uganda 02 October 2000 (Republic of) Zambia 02 October 2000 Source: AGOA.info-website: http://www.agoa.info/index.php?view=about&story=country_eligibility, 7/16/2005.

To put is simply, AGOA offers eligible sub-Saharan African countries the opportunity to receive duty and quota free access to U.S. markets for many products through the GSP. At present, the GSP covers approximately 4, 600 product lines; the AGOA GSP however applies to more than 6, 435 product lines. A sample list of goods that are eligible for duty and quota free access through AGOA would include certain automotive parts, chemicals, apparels, capital equipment, ceramics, and various plastics.52 The duty-free access prescribed for most products originating in eligible sub- Saharan African nations is one of the key benefits of AGOA. These products may enter

52 The complete list of AGOA GSP products can be found on the website of the United States Trade Representative at http://www.ustr.gov/assets/Trade_Development/Preference_Programs/AGOA/AGOA_Implementation_Gu ide/asset_upload_file146_6512.pdf.

45 the U.S. duty-free so long as they meet AGOA’s general rules of origin requirement, are imported directly from a recognized beneficiary country, and are not import sensitive.53 For example, in 2001, AGOA enabled its beneficiaries to import more then $7.6 billion in duty-free goods to the U.S.54 The granting of preferential access to U.S. markets for beneficiary sub-Saharan African nations through AGOA was done in three parts. First, as was already mentioned, the existing GSP (covering roughly 4,600 product lines) was extended by AGOA through September 30, 2008, and then, to 2015. Secondly, AGOA authorized the President to provide duty-free access for various goods not covered through the GSP. Lastly, provisions were made to grant duty-free and quota free access for apparel and textile articles that are either hand-loomed, handmade, or folklore in nature.55 These three provisions have proven to be of great benefit to sub-Saharan African exporters. To begin with, the competitive needs limitation which prohibits the importation of GSP-eligible goods above a mandated level was waived under the original AGOA legislation for all beneficiary nations.56 Another attractive quality of AGOA is that it provides regional exporters with a more stable environment to conduct business. Before AGOA, sub-Saharan African exporters were never sure if Congress would continue to renew the GSP program every two years. Now, with AGOA, they can be assured that their preferential status will continue though the year 2015. Exporters have also benefited from President Bush’s usage of the expanded GSP authority, which in December 2001 gave him the authority to grant duty-free access to an additional 1,835 product lines.57

53 USTR/USAID, African Growth and Opportunity Act: Implementation Guide, October 2000, p.4. AGOA’s general rules of origin requirements stipulate that: The product must be imported directly from the AGOA-beneficiary country into the United States; items must be "growth, product or manufacture" of one or more AGOA-beneficiary countries; products may incorporate materials sourced from outside countries (i.e. non AGOA-beneficiaries) provided that the sum of the direct cost or value (i.e. the transaction value) of the materials produced in the AGOA-beneficiary countries(s), plus the "direct costs of processing" undertaken in the AGOA-beneficiary countries, equal at least 35 percent of the product's appraised value at the U.S. port of entry; in addition, up to a total of fifteen percent of the thirty-five percent value (as appraised at the U.S. port of entry) may consist of U.S. parts and materials. 54 U.S. Department of Commerce: Office of Africa, U.S.-African Trade Profile, March 2002, p.1. 55 See USTR 2002 Comprehensive Report, supra note 14, at 16. 56 See USTR/USAID African Growth and Opportunity Act: Implementation Guide, supra note 53, at p.5. 57 See USTR 2002 Comprehensive Report, supra note 14, at 16.

46 One area that AGOA has enabled eligible sub-Saharan African exporters to seize an advantage over their competition is in apparel sales to the U.S. Through AGOA, eligible exporters are currently exempted from the average 17.5 percent tariff duty on all apparel goods entering the U.S.58 All in all, it would seem that these revisions have gone a long way in ensuring beneficiary nations that very few of their apparel-oriented goods will not be eligible for duty-free access to the prized American market. As was just suggested, AGOA requires that beneficiary countries meet specified customs-related requirements in order to receive apparel and textile benefits offered by the Act. These requirements were implemented in order to ensure that unlawful transshipment and the use of counterfeit materials does not occur. As of July 2005, 25 nations had been declared eligible to receive apparel and textile benefits through AGOA.59 Table 8 below displays both the list and date of those sub-Saharan African countries that have been deemed eligible to receive AGOA apparel benefits.

Table 8

AGOA Nations Eligible For Apparel Benefits COUNTRY DATE DECLARED ELIGIBLE FOR APPAREL PROVISION (Republic of) Benin 28 January 2004 (Republic of) Botswana 27 August 2001 (Republic of) Cameroon 01 March 2002 (Republic of) Cape Verde 28 August 2002 (Republic of) Côte d'Ivoire 17 December 2003 Ethiopia 02 August 2001 (Republic of) Ghana 20 March 2002 (Republic of) Kenya 18 January 2001 (Kingdom of) Lesotho 23 April 2001 (Republic of) Madagascar 06 March 2001 (Republic of) Malawi 15 August 2001 (Republic of) Mali 11 December 2003 (Republic of) Mauritius 18 January 2001 (Republic of) Mozambique 08 February 2002 (Republic of) Namibia 03 December 2001

58 See USTR/USAID African Growth and Opportunity Act: Implementation Guide, supra note 46, at 5. 59 Id, at 11.

47 (Republic of) Niger 17 December 2003 (Federal republic of) Nigeria 14 July 2004 (Republic of) Rwanda 04 March 2003 (Republic of) Senegal 23 April 2002 (Republic of) Sierra Leone 05 April 2004 (Republic of) South Africa 07 March 2001 (Kingdom of) Swaziland 26 July 2001 (United Republic of) Tanzania 04 February 2002 (Republic of) Uganda 23 October 2001 (Republic of) Zambia 17 December 2001 Source: AGOA.info-website: http://www.agoa.info/index.php?view=about&story=country_eligibility, 7/16/2005.

The establishment of an effective visa system is perhaps the most notable of the custom-related requirements of AGOA. For a visa system to be effective, as it applies to textile and apparel products, AGOA requires sub-Saharan African governments to guarantee that the goods for which benefits are claimed are in fact produced in the region under the rules of origin which cover those benefits. Each shipment of goods receiving AGOA benefits must be stamped with an original visa on the ships’ invoice before it may dock at a U.S. port. Each visa must contain information regarding the date of the visa, quantity of goods being shipped, the preference grouping the goods qualify under, and a country code. In addition to these requirements, it is also understood that beneficiary nations will agree to assist U.S. Customs Service efforts in preventing unlawful transshipment, use of counterfeit documentation, and various other investigative activities.60 For those Lesser Developed Beneficiary Countries (LDBCs) in which their per capita GNP fell under $1,500 in 1998, AGOA has set up a Special Rule that will allow them to have duty-free access for apparel made from fabrics originating anywhere in the world until September of 2004.61 President Clinton’s 2000 proclamation designated 28 sub-Saharan African Countries as eligible for the Special Rule. At present, South Africa, Gabon, Mauritius and the Seychelles are the only eligible sub-Saharan African nations not designated as LDBCs, and therefore they do not benefit from Special Rule.

60 See USTR/USAID African Growth and Opportunity Act: Implementation Guide, supra note 53, at p.8. . 61 U.S. Department of Commerce, About AGOA—Apparel Provisions, http://www.agoa.gov/About_AGOA/about_agoa.html, 6/3/2005. AGOA III has since extended this special provision on fabrics originating anywhere in the world until September of 2007.

48 However, there exists an annual cap on imports of certain apparel, which include articles imported under the Special Rule. The cap applies to all apparel that is assembled in beneficiary nations from fabric formed in beneficiary nations from yarn originating either in the U.S. or in beneficiary nations.62 Despite the restrictions of the cap, eligible nations in 2000/2001 were able to double the volume of apparel they shipped to the U.S. in 1999. Furthermore, AGOA has instructed the Secretary of Commerce to implement a tariff snapback in the event that surges in imported articles were to threaten various domestic industries. The Commerce Department monitors apparel imports on a monthly basis in order to guard against such occurrences.63 If the Department finds that a surge in imported apparels does exist, the President is then authorized to suspend duty-free privileges of the articles in question. In an effort to help those sub-Saharan African nations that are not designated as LDBC to maximize their export apparel potential, AGOA has established the De Minimis Rule. Under the De Minimis Rule, apparel products assembled in sub-Saharan Africa which would otherwise be considered eligible for AGOA benefits, but for the presence of some fibers or yarns not wholly formed in the United States or a particular beneficiary sub-Saharan African country, they will thus be eligible for benefits so long as the total weight of all such fibers and yarns is not more than 10 percent of the total weight of the article.64 Success Stories

Quite simply, AGOA benefits have largely accrued in those countries that have done the most to help themselves, encouraging investment and trade, and maintaining stability. We have worked with other countries to try to improve the results of AGOA through our trade capacity building programs and will continue to do so, but ultimately whether a country can benefit from AGOA is largely in their own hands. ─Walter H. Kansteiner, Assistant U.S. Secretary of State (African Affairs)65

Since AGOA’s passage, many U.S. officials have credited it for spearheading sub-Saharan Africa’s recent economic development initiatives here at the onset of the 21st

62 See USTR 2002 Comprehensive Report, supra note 14, at 18. 63 See U.S. Department of Commerce, About AGOA—Apparel Provisions, supra note 61. 64 AGOA.gov, Apparel Eligibility, http://www.agoa.gov/eligibility/apparel_eligibility.html, 7/16/2005. AGOA III increased this percentage to ten percent, up from the original seven percent. 65 U.S. Senate, Testimony before the Senate Foreign Relations Committee: Walter H. Kansteiner, Assistant Secretary of State for African Affairs United States Department of State (Wednesday, June 25, 2003), http://www.senate.gov/~foreign/testimony/2003/KansteinerTestimony030625.pdf#search='agoa%20succes s%20stories', 4/9/2006.

49 century. As of 2003, it was estimated by the Office of the USTR that AGOA had led to a 61.5 percent increase in U.S. imports from sub-Saharan Africa.66 Former USTR Robert Zoellick, in speaking on AGOA success stories at the 2003 U.S. sub-Saharan Africa Trade and Economic Cooperation Forum, commentated that South African automobile exports to the U.S. in 2003 increased sixteen-fold; 15,000 new jobs were created in the south African nation of Lesotho; and that a company from Georgia had already begun to export high-quality cotton yarn to Mauritius for assembly into apparel (this company did not conduct business in the sub-region prior to AGOA).67 AGOA has contributed to even further job creation and economic growth in Lesotho in the three years since Robert Zoellick first delivered his positive assessment of the nation. Reporting in an article by the Johannesburg Business Day, South Africa’s largest economic journal, found that in February 2006 Lesotho factories were producing more than two million pairs of jeans and six million knitted garments a month for export to U.S. brands and retailers such as the GAP, Wal-Mart, Levi Strauss, and Jones Apparel. The Journal also estimated that as of 2004, Lesotho’s apparel exports to the U.S. had grown from just $50 million in 1996 to roughly $456 million, and that income generated by apparel workers had begun to circulate through Lesotho’s small economy. The article concluded by suggesting that the growth of the Lesotho apparel industry over the past five years can be directly attributed to the preferential trade opportunities generated by AGOA.68 South Africa is one of the United States' foremost trading partners in Africa. Total trade between the two countries has steadily increased since AGOA’s enactment in 2000. Table 9 below displays South Africa’s increasing trade surplus with the U.S. since 1999, which in 2004, amounted to roughly $2.7 billion. U.S. exports to South Africa far exceed U.S. exports to any other country from sub-Saharan Africa, emphasizing the

66 The Office of the U.S. Trade Representative, 2003 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Third of Fifteen Annual Reports ( May 2003), p.1. 67 Remarks by U.S. Trade Representative Robert B. Zoellick, Opening Ceremony of The U.S.-sub-Saharan Africa Trade and Economic Cooperation Forum, http://www.agoa.mu/speech/speech8.htm, University of Mauritius, 2/10/2003. 68 Open Source Center, (Unclassified) Johannesburg Business Day: Bold partnership paying off in Lesotho, http://www.fbis.gov/portal/server.pt/gateway/PTARGS_0_34846_200_240_- 240_43/http%3B/apps.fbis.gov%3B7011/fbis.gov/content/Display/5930984?action=advancedSearch&highl ightQuery=eJzTcHT3d9QEAATvAWo%3D&fileSize=9678, 2/21/2006.

50 importance of access to the South African market. U.S. exports to South Africa in 2004 reached an all time high of $3.1 billion, more than $1.8 billion more than Nigeria, the second largest U.S. export market in the region.69 According to statistics provided by the U.S. Commerce Department, South Africa once again commanded the lion’s share of U.S. exports to sub-Saharan Africa in 2005, representing close to 38 percent of the total market.70 AGOA is directly credited with expanding U.S. imports from South Africa as well. In 2004, the U.S. imported $5.9 billion in goods from South Africa, an increase of more than $1.3 billion from the previous year. This dollar amount represents more than the total combined amount of 35 other sub-Saharan African nations. 71

Table 9

Trade Between The U.S. and South Africa (U.S. $Million)

6,000 5,000 4,000 3,000 2,000 U.S. Exports 1,000 U.S. Imports 0 Trade Balance -1,000 -2,000 -3,000 1999 2000 2001 2002 2003 2004 2005

Source: U.S. Census Bureau, Trade in Goods (Imports, Exports and Trade Balance) with South Africa, http://www.census.gov/foreign-trade/balance/c7910.html#2005, 4/15/2006.

Unlike many of the other nations in the sub-region, AGOA has enabled South Africa to substantially diversify its trade relationship with the U.S. The implementation of extensive trade liberalization measures in 1990’s, coupled with a depreciating

69 AGOA.info, Country Information—South Africa, http://www.agoa.info/index.php?view=country_info&country=za#, 4/15/2006. 70 U.S. Department of Commerce, 2006 U.S.-African Trade Profile, http://www.agoa.gov/resources/US- African%20Trade%20Profile%202006.pdf, 4/15/2006. 71 U.S. Embassy in South Africa, America Invests in South Africa, http://usembassy.state.gov/southafrica, 10/28/2002.

51 exchange rate, allowed South Africa to take full advantage of AGOA’s policies.72 Former U.S. Ambassador to South Africa, Delano Lewis, has stated that many of the goods covered under AGOA are those South Africa enjoys a special advantage in producing.73 With about 4,500 products qualifying for export under the U.S. GSP program, combined with an additional 1,600 products now covered through AGOA, South Africa has over the past two decades developed into the gold standard for trade diversity on the African continent. Beverages, seafood, heavy machinery, chemical products, footwear, jewelry, and a vast assortment of steel and aluminum products are just a small sample of South African goods receiving duty-free treatment through AGOA. Since AGOA’s inception, the total number of American companies operating in South Africa has increased to well over 900. American companies currently employ more than 125,000 South Africans with investments totaling $R19.6 billion. With AGOA’s help, in 2002, South African companies spent close to $R16 million in training people to develop skills by providing educational facilities for information technology, welding, farming, health, entrepreneurship, etc. These same companies, between the years 2000-2002, spent more than $R1.5 billion on corporate social responsibility programs such as burn units, AIDS projects, school facilities, and the disabled.74 Dynamic Commodities of Port Elizabeth, South Africa, provides a clear example of how AGOA has helped South African businesses attain higher earnings through their access to the U.S. market. In 2005, Dynamic Commodities, which sources pineapples, apples, oranges, lemons, and coconuts, secured a contract to export frozen fruit sorbet to American distributors in Florida and Wisconsin.75 Two years earlier, the company, with technical and marketing assistance from the USAID-funded South Africa International Business Linkages (SAIBL) program, was able to secure a contract with the popular convenient store chain 7-Eleven.76 Since that time, American grocery giants Costco and

72 International Monetary Fund, Staff Report for the 2002 Article IV Consultation: South Africa, p.6, 6/6/2002. 73 Automotive Industry Export Council, AGOA Guide: Non-Textile Sectors, http://www.aiec.co.za/news/20011022/the_guide.htm, p.2, 2/10/2003. 74 See U.S. States Embassy in South Africa, supra note 71. $R denotes the South African dollar—Rand. 75 Frozen fruit sorbet is made by removing fruit pulp from fruit shells; after the extraction process, the fruit shells are then filled with sorbet, and sent away for processing at a refrigeration plant. 76 The SAIBL program, a subsidiary of the Corporate Council on Africa, has created more than eleven thousand jobs in South Africa, generated more than $600 million in business transactions for both South African and American companies. For historically disadvantaged South African companies, SAIBL offers

52 Wal-Mart have also begun stocking their stores throughout the U.S. with sorbet made from this South African company.77 AGOA exports have been recorded in just about every major industry sector in South Africa. The automotive industry has perhaps been the single largest beneficiary of AGOA. By January 2002, automotive exports to the U.S. more than quadrupled the previous year’s total. AGOA has also enabled South African auto-plants to extend their capacities, resulting in the creation of thousands of new jobs in the South African automotive sector. In relation to regional economic integration, AGOA has helped South Africa to import cotton from Zambia and export textiles to Mauritius. AGOA has also helped South Africa to increase its investments in the textile industries of its neighbors— Swaziland, Lesotho, and Mozambique.78 AGOA successes have also taken place in Cameroon. In recent years, two Cameroonian businesses, Blaz Design Management & Investment, and Brodwell International, have begun to embark on high volume export trade to the American market, and created new job opportunities in the textile, fashion and dressmaking industry sectors. In December of 2005, a partnership accord was singed between the U.S. Connection for Aid to African Development (USCAD) and Blaz Design Management & Investment, for the supplying of three million work uniforms. Blaz Design Management President, J.E. Essomba, believes that the accord will lead to the possible creation of 50 to 100,000 new jobs in Cameroon, and five to ten thousand new jobs in the U.S. According to Cameroon’s Minister of Commerce, Luc Magloire Mbarga, “this accord is a step forward in the realization of AGOA in Cameroon”.79 Before AGOA, the bulk of Brodwell International’s goods (namely swimsuits and lingerie) were shipped for export to France. Now, Brodwell International’s President and

training and business capacity support. The program also mentors growth-oriented enterprises to become locally and internationally competitive, and introduces them to new markets and buyers. SAIBL also attempts to identify pre-screened South African partners and suppliers for U.S. companies and various multinational organizations. 77 U.S. Department of State, Dynamic Commodities and AGOA, http://usembassy.state.gov/paris- ars/wwwfsaf1.pdf, 4/9/2006. Dynamic Commodities employs approximately 200 workers, primarily from historically disadvantaged backgrounds in South Africa’s Eastern Cape. 78 See USTR 2002 Comprehensive Report, supra note 14, at 127. 79 Open Source Center, (Unclassified) Cameroon: Blaz Design To Supply 3 Million Uniforms to US Company, http://www.fbis.gov/portal/server.pt/gateway/PTARGS_0_3486_..., 4/9/2006. Blaz Design Management & Investment is a funding, conception, realization and follow-up development project research public company.

53 founding owner, Caroline Kendem-Sack, expects to expand her company by breaking into the U.S. market. In 2005, thanks to contacts made during the Apparel Sourcing Association Pavilion (ASAP) Global Sourcing Show in Las Vegas, Ms. Kendem-Sack was able to successfully finalize a deal to export 80,000 medical scrubs per month for an American company; the contract is reportedly worth three million.80 Despite Brodwell's small size, Ms. Kendem-Sack believes that the new contract will enable her company to quadruple its factory in Douala, Cameroon to 26,000 square feet, and will house more than 200 workers when it opens at the end of summer 2006. Ms. Kendem-Sack also expects to introduce a new brand—Ken Atlantic—to produce scrubs and polo shirts while Brodwell International will continue to produce its traditional product lines.81 Sub-Saharan African producers in Botswana have recently begun to take advantage of their trade opportunities through AGOA. Caratex of Botswana, which produces knit-to-shape jerseys and sweaters for export to markets in the U.S. and E.U., reported net earnings in excess of six million dollars in 2003. Since 2004, the company’s workforce has exploded from 500 to roughly 1,300 workers. With the launch of its new business attire and jeans lines in the spring of 2005, Caratex anticipates that it will need to more than double its workforce by the close of fiscal-year 2007.82 Senegal’s Pecheries Frigorifiques du Senegal, which has produced flake, chunk and cake tuna for markets in Europe for seventeen years, and employees more than 600, was invited in March 2005 to be one of six African companies represented at the Boston International Seafood Fair (BISF). Sonia Sharara, co-owner of Pecheries Frigorifiques du Senegal, took several samples of the company’s pouched tuna to the Fair, where she able to complete negotiations for a 200,000 pouch (tuna) order to the United States via a broker she met at the show. After the 2005 Fair, Ms. Sharara commented that “AGOA

80 AGOA.gov, Highlighted AGOA Success Stories: Cameroonian Swimwear Maker Rides the Wave into U.S. Market, http://www.agoa.gov/agoa_forum/agoa_success_stories1.html, 4/9/2006. The ASAP Global Sourcing Show is a trade show for U.S. buyers to meet hundreds of overseas ready-made garment manufacturers—Show’s are held twice a year in Las Vegas, Nevada. 81 Id. 82 U.S. Department of State, Reaping The Benefits of AGOA—Caratex, http://usembassy.state.gov/paris- ars/wwwfbot1.pdf#search='Caratex%20Botswana%20agoa', 4/9/2006.

54 gives us duty-free status—Senegal and Pecheries Frigorifiques can benefit from that big competitive advantage.”83 Finally, Chandu EPZ Ltd, a Kenyan textile firm, after attending the May 2004 Sources Trade Show in New York City, was able to secure a 1.1 million dollar order with the JC Penny Company to finish stitching and export knit pants through AGOA. After visiting Chandu EPZ facility in Nairobi, Kenya, JC Penny was pleased with the ability of the firm to meet orders to specification. In recent years, EPZ has also successfully completed a contract with Wal-Mart to process overflow stock comprising of 60,000 knit pants.84 Dollars and Cents

In trade terms, these realities have kept our trade relationship with Africa relatively small and dominated by a few natural resource commodities—this pattern is unlike our trade with any other region of the world; and it contributes both to slow economic development and the vulnerability of many African economies to fluctuations in world commodity prices. ─USTR Ambassador Charlene Barshefsky85

It had become evident as early as 2002, according to John Ricter, Director of Export-Import [Ex-Im] Bank Africa that AGOA was beginning to open the continent to greater investment opportunities.86 As Table 10 demonstrates, on face value, the raw numbers would seem to agree with Director Richter’s assessment. U.S. trade with sub- Saharan Africa increased by 50 percent in AGOA’s first year of enactment to $29.4 billion, and the U.S. exports to the region also increased by 6.4 percent to $5.295 billion while imports from the region increased by 67.2 percent to $23.480 billion.87 According

83 The Daily Star, US trade preferences to cast wide net for exports, http://www.thedailystar.net/2005/07/18/d50718051855.htm, 4/9/2006. 84 U.S. Department of State, Kenyan Company Secures JC-Penny and Wal-Mart Orders, http://usembassy.state.gov/paris-ars/wwwftan1.pdf, 4/9/2006. Chandu EPZ’s trip to the 2004 Sources Trade Show in New York was sponsored by the East and Central Africa Global Competitiveness Hub (ECA Hub). The ECA Hub, which is sponsored in part by USAID, seeks to strengthen the capacity of East and Central African countries to participate more effectively in the multilateral trading system. The ECA Hub also looks to develop and implement private sector business support strategies for increasing trade through AGOA. 85 USTR, Ambassador Charlene Barshefsky: American Trade Policy In Africa, D.C. Bar International Law Section, Washington, D.C., p. 2, 7/6/2000. 86 U.S. State Department, AGOA Is Working in Africa, Export-Import Bank Official Says, http://usinfo.state.gov/regional/af/trade/a3011703.htm, 2/7/2003. 87 The Office of the U.S. Trade Representative, 2001 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The First of Fifteen Annual Reports ( May 2001) p.6. U.S. exports to sub-Saharan Africa in 2000 were

55 to U.S. Government Officials, in the first eight months of 2002, U.S. imports of new non- fuel AGOA products from eligible AGOA nations increased by 155 percent to $998 million; while at the same time, exports to the U.S. from every other region in the world decreased.88

Table 10

U.S. Trade with sub-Saharan Africa (Billions)

25

20

15 U.S. Exports 10 U.S. Imports

5

0 1999 2000 2001 2002

Source: 2003 Comprehensive Report on U.S. Trade and Investment Policy Toward sub-Saharan Africa and Implementation of the African Growth & Opportunity Act: http://www.agoa.gov/resources/annual_3.pdf, 7/18/2005.

As Table 11 below demonstrates, AGOA has enabled the U.S. to become the largest single country export market for sub-Saharan Africa, accounting for over 24.3 percent of its exports. The U.S. has also become the region’s leading foreign investor, estimated to be at around $16 billion.89 These numbers seem to highlight the increased importance of the American presence on the African continent.

concentrated in aircraft and parts, oil and gas field equipment, wheat, motor vehicles and parts, industrial chemicals, computers, peripherals and software, construction machinery and parts, and telecommunications equipment. 88 U.S. State Department, Andrew Young Says Bush Administration is Tops for Africa, http://usinfo.state.gov/regional/af/trade/a3011705.htm, 2/7/2003. 89 USTR Robert Zoellick, AGOA Forum: Opening Remarks, University of Mauritius, http://www.agoa.mu/speech/speech8.htm, 2/10/2003. The U.K. came in a distant second at eight point two percent, with France, in third, at 6.1 percent.

56 Table 11

Sub-Saharan Africa’s Principle Trading Partners (2003) (Numbers Represent Trade in Billions of Dollars)

Source: IMF Directions of Trade Statistics Yearbook, 2004: http://www.imf.org, 7/18/2005.

With the help of AGOA, sub-Saharan Africa experienced an overall growth of 2.7 percent in 2001, according to World Bank estimates, down from three percent in 2000. Sub-Saharan Africa, however, fared better than the global growth rate which fell sharply to 1.5 percent, down from 3.8 percent the previous year according to International Monetary Fund (IMF) statistics. As the number would seem to suggest, 2001 marked the first year in some time that sub-Saharan Africa attained a faster rate of growth than the world on a whole.90 Two-way trade between the United States and sub-Saharan Africa rose in 2004 as both exports and imports increased. Two-way trade increased by 37 percent from the previous year to roughly $44 billion. U.S. exports to sub-Saharan Africa rose 25 percent to $8.6 billion, which was largely due to increased sales of oil field equipment and parts, aircraft, wheat, vehicles, and electrical machinery (including telecommunications equipment). U.S. imports rose 40 percent from 2003 to $35.9 billion, due primarily to

90 See USTR 2002 Comprehensive Report, supra note 14, at 22.

57 increased imports of crude oil (mainly driven by an increase in oil prices) as well as increased imports of platinum, diamonds, woven and knit apparel, and ferroalloys.91 The year 2004 also witnessed an 88 percent increase in AGOA imports from sub- Saharan Africa, which represented $26.6 billion. This figure includes duty-free imports from AGOA eligible countries under the pre-existing U.S. GSP and the expanded AGOA GSP, plus textile and apparel imported duty-free and quota-free under AGOA provisions.92 Unfortunately, in contrast to the positive impression that the casual observer may assume after reviewing the record of AGOA thus far, upon closer examination, it becomes evident that not everyone has benefited equally from AGOA. As of 2005, sub- Saharan Africa still accounted for less than 1 percent of total U.S. merchandise exports, and slightly more than 2 percent of total U.S. imports. The U.S. Commerce Department reported in 2003 that the region accounted for only 1.5 percent of total world trade (virtually unchanged from the years 2001 and 2002). The number of sub-Saharan Africans living on less than $1 a day continues to expand at an alarming rate—nearly every socio-economic indicator suggests that the region will continue to rank last in these categories for some time to come.93 Also, counter to IMF and ITC reports of the vast economic expansion of sub- Saharan Africa, in trade terms, the trade relationship between the U.S. and the region has over the last six years continued to remain relatively small, and dominated almost entirely by a few natural resource commodities. In 2001, Assistant USTR Rosa Whitaker stated that “AGOA has not only expanded the U.S.-sub-Saharan African trade relationship, but also diversified it.”94 However, in contrast, former USTR Charlene Barshefsky had only a year earlier mentioned that out of the $14 billion the U.S. imported from Africa in 1999, nearly 80 percent consisted of three commodities: 500 million barrels of oil, 100.5

91 U.S. Department of Commerce, 2005 U.S.-African Trade Profile, http://www.agoa.gov/resources/US- African%20Trade%20Profile%202005.pdf, 7/18/2005. 92 Id. 93 Id. 94 U.S. State Department, U.S. Africa Trade Official Addresses OAU Economic Forum in Abuja, http://usinfo.state.gov/regional/af/trade/a1100401.htm, 2/10/2003.

58 tons of platinum, and roughly 900,000 diamond carats.95 As of 2005, petroleum products accounted for close to 90 percent of total AGOA imports.96

Table 12

Leading U.S. Imports from sub-Saharan Africa (2004) Item 2004 Import Value ($ Millions) Oil (Crude and non-Crude) 26,124.9 Woven and Knit Apparel 1,756.9 Platinum 1,746.8 Diamonds 934.6 Ferroalloys 536.5 Cocoa 491.5 Motor Vehicles 423.5 Source: U.S. Department of Commerce, Bureau of Census: http://www.census.gov/, 7/18/2005.

The Commerce Department’s 2002 U.S.-African Trade Profile supports Barshefsky’s claims by referring to trade between the U.S. and sub-Saharan Africa as highly concentrated between a number of small African nations accounting for what it describes as an “overwhelming share” of the total volume of both exports and imports. In 2004 for example, four nations accounted for roughly 68 percent of all U.S. exports to sub-Saharan Africa; South Africa alone absorbed 37 percent of these exports.97 Accounting for around 76 percent of U.S. purchases, the 2005 data suggest that three out of the four countries that make up the majority of U.S. exports also constitute an overwhelming majority of U.S. imports as well.98

Table 13

U.S. Exports to Major sub-Saharan Africa Trading Partners (2004)

95 See USTR Ambassador Charlene Barshefsky, supra note 85, at 2. 96 See U.S. Department of Commerce 2005 U.S.-African Trade Profile, supra note 91. 97 Nigeria accounted for 18.1 percent, Angola accounted for 6.9 percent, and Ethiopia accounted for 5.4 percent of U.S. exports in 2004. 98 See U.S. Department of Commerce 2005 U.S.-African Trade Profile, supra note 84 . Nigeria accounted for forty-five point three percent, South Africa accounted for sixteen point six percent, and Angola accounted for twelve point six percent; combined, the three nations represent almost seventy-six percent of U.S imports from sub-Saharan African in 2004.

59

Source: U.S. Department of Commerce, Bureau of Census, http://www.census.gov/, 7/18/2005.

Table 14

U.S. Imports from Major sub-Saharan Africa Trading Partners (2004)

Source: U.S. Department of Commerce, Bureau of Census: http://www.census.gov/, 7/18/2005.

Chapter Conclusion This chapter examined four subjects: (1) the origins of the AGOA legislation and its subsequent implementation by the United State Trade Representative; (2) the process by which sub-Saharan African nations become eligible to receive the benefits of AGOA; (3) AGOA related job creation and economic growth in various sub-Saharan nations; and

60 (4) the manner in which AGOA has affected the U.S.’s trade relationship with the sub- Saharan African region. An examination of AGOA’s beginnings revealed that the trade initiative signaled a dramatic shift in U.S. foreign policy in sub-Saharan Africa—through AGOA, the U.S. for the first time emphasized increased trade as a means of promoting economic development in Africa. However, AGOA was not welcomed with open-arms from everyone in the U.S. government. In particular, members of the Congressional Black Caucus, AFL-CIO, TransAfrica, and various African NGOs expressed concern that AGOA was an attempt on the part of multinational interests to force sub-Saharan African governments to prioritize macroeconomic policies that were not appropriate for the sub- region’s level of development. The U.S. government agency most responsible for overseeing AGOA’s implementation has been the Office of the United States Trade Representative. The centerpiece of the USTR’s AGOA implementation efforts thus far has been the promotion of the annual U.S. sub-Saharan Africa Trade and Economic Forum. The Forum serves as the primary vehicle for facilitating continuous dialogue between the U.S. and sub-Saharan African nations on trade and development related issues. In their attempt to expand the scope of beneficiary sub-Saharan African nation’s access to the U.S. market, Congress has initiated two significant legislative overhauls: AGOA II (2002) and AGOA III (2004). AGOA II substantially expands preferential access for imports from beneficiary Sub Saharan African countries. The main crux of the AGOA III legislation was that it extended the preferential access for imports from beneficiary nations through September 2015. Presently, only 37 out of 48 sub-Saharan African nations are eligible to receive AGOA benefits. The eligibility status of every AGOA beneficiary is reviewed on an annual basis by the TPSC; the final decision on eligibly is decided by the U.S. President. The primary benefit of AGOA to sub-Saharan African nations is that it offers eligible nations the opportunity to receive duty and quota free access to the U.S. market, the largest market in the world. U.S. officials have credited AGOA for helping to jump start sub-Saharan Africa’s economic profile in recent years. Since taking affect in 2000, AGOA has directly

61 contributed to the creation of new jobs, increased profit margins, and expanded foreign investment in several sub-Saharan African markets. South Africa, the U.S.’s second largest trading partner in the region, has by far been the largest beneficiary of the AGOA legislation. South Africa’s record trade surpluses with the U.S. are indicative of the increased volume of trade between these two countries as a result of AGOA. The potential impact of AGOA to expand the trade relationship between the U.S. and sub-Saharan Africa was made evident during the Act’s first year, when trade between the U.S. and the sub-region increased by more than 50 percent. Over a six-year period, AGOA has helped the U.S. deepen its ties economically with sub-Saharan Africa. In so doing, the U.S. has grown to become the sub-region’s largest single-country export market, and the region’s leading foreign investor. AGOA has unquestionably helped to create new economic opportunities in sub- Saharan Africa. The Act has led to the creation of thousands of new jobs across the sub- region, and has fostered hundreds of millions of dollars in investment. Hence, the research maintains that AGOA has become the central element of the Bush Administration’s trade and investment policy toward sub-Saharan Africa. In addition to the economic incentives already mentioned, AGOA has also paved the way for high-level dialogue between the U.S. and sub-Saharan African nations on issues such as trade, economic/political reform, technical support, and HIV/AIDS awareness. However, while the data has shown that AGOA has increased trade and investment in sub-Saharan Africa, the same data has also demonstrated a general unevenness in the trade relationship between the U.S. and sub-Saharan Africa. As Table 12 demonstrated, oil imports continued in 2004 to dominate U.S. imports from sub- Saharan Africa. Of the top five AGOA beneficiary countries (in terms of total trade with the U.S.), all happen to be oil producers.99 The second highest category of U.S. imports from the sub-region, woven and knit apparel, at 4.9 percent, underscore even further the narrow dynamics of this trade relationship.100 When AGOA was passed in 2000, it was widely heralded as a new beginning for Africa. Many within both the U.S. and sub-Saharan African policy communities

99 The top five AGOA beneficiary countries include Nigeria, Angola, Gabon, South Africa, and Chad. 100 See U.S. Department of Commerce 2005 U.S.-African Trade Profile, supra note 91.

62 suggested that AGOA would expand and diversify the trade relationship between the U.S. and the sub-region. As recently as July of 2005, President Bush argued that "the message is that AGOA is getting results; its success has proven that open trade and international investment are the best ways to promote African development."101 The crux of the problem with AGOA, thus far, as Fred Oladeinde, President of The Foundation for Democracy in Africa, has argued, is that “the AGOA framework, as it presently stands, provides no guarantees that Africa as a whole will benefit from the process."102 After carefully reviewing the trade data, the claims of expanded trade and investment, when taken on the whole, seem to reveal that President Oladeinde’s claims are correct; the trade benefits associated with AGOA have not been evenly distributed throughout sub-Saharan Africa. To put it simply, U.S. trade with sub-Saharan Africa is highly centralized. After six years of enactment, AGOA has not come close to substantially expanding or diversifying trade between the U.S. and sub-Saharan Africa. Why has the benefits of AGOA not been evenly distributed across the sub-region? What difficulties have sub-Saharan African nations faced with regard to AGOA’s implementation? Thus far, what is the sub-Saharan African viewpoint regarding AGOA’s record? Do they have any opinions to suggest why AGOA has not transformed the overall trade relationship between the U.S. and the sub-region? For the purposes of answering these and other questions related to the problems associated with AGOA implementation, the dissertation will, in chapter three, examine the Ghanaian Implementation of the Act. The author believes that by examining the difficulties the Ghanaian Government and business community have encountered in their attempts to implement AGOA in Ghana that a better understanding will be gained of the current factors that are preventing sub-Saharan Africans from taking full advantage of their preferential access to the coveted U.S. market.

101 Yahoo! News, Africa hopes to trade its way out of poverty after AGOA forum, http://news.yahoo.com/news?tmpl=story&u=/afp/20050718/bs_afp/africaustradeagoa_050718194411, 7/20/2005. 102 IRINnews.org, AFRICA: Problems and solutions on the AGOA agenda in Dakar, http://www.irinnews.org/report.asp?ReportID=48196&SelectRegion=Southern_Africa&SelectCountry=AF RICA, 7/20/2005.

63 CHAPTER TWO NOTES

1. AGOA.gov, President Bush’s Opening Remarks to The U.S.-sub-Saharan African Trade and Economic Cooperation Forum: October 29-30, 2001, http://www.agoa.gov/agoa_forum/kjr21300.PDF. 2. The Clinton Administration Record In sub-Saharan Africa, http://usinfo.state.gov/regional/af/record.htm. 3. Public Citizen, The Supporters and Opponents of the NAFTA for Africa, http://www.citizen.org/trade/africa/hope/articles.cfm?ID=1640. 4. Public Citizen, Meet The Opponents of The NAFTA for Africa Act, http://www.citizen.org/trade/africa/house_fight/articles.cfm?ID=1819. 5. Public Citizen, The African Growth and Opportunity Act: From Bad To Worse, http://www.citizen.org/trade/africa/house_fight/african/articles.cfm?ID=6585. 6. U.S. Department of State, African Union Official Values AGOA Approach to Development, http://usinfo.state.gov/regional/af/trade/a3011302.htm. 7. The Office of the U.S. Trade Representative, 2002 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Second of Eight Annual Reports ( May 2002). 8. U.S. Department of State, Trade and Markets Key to Africa Prosperity, Bush Says, http://usinfo.state.gov/regional/af/trade/a3011501.htm. 9. The Second US-SSA AGOA Forum, Participants, http://www.agoa.mu/. 10. USTR Robert Zoellick, 2003 AGOA Forum: Closing Remarks. 11. The Second US-SSA AGOA Forum, Closing Remarks: The Hon. Minister J.K. Cuttaree, http://www.agoa.mu/speech/speech17.htm. 12. The Second US-SSA AGOA Forum, NGO Event, http://www.agoa.mu/speech/speech14.htm. 13. U.S. Department of State, AGOA Successes and Challenges in Target Sectors, http://www.state.gov/e/rls/rm/2003/26969.htm.

64 14. U.S. Department of State, Remarks at The United States Sub-Saharan Africa Trade and Economic Cooperation Forum, http://www.state.gov/secretary/former/powell/remarks/2003/26990.htm. 15. Dakar 2005, 2005 U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, http://www.agoaforum.org/Information.asp?hdnGroupID=21&hdnLevelID=0&hd nlocaleid=2. 16. AGOA.gov, Summary of AGOA II, http://www.agoa.gov/agoa_legislation/agoa_legislation2.html. 17. Bridges Weekly Trade News Digest, AGOA III Allows Africa’s Trade Benefits In The US To Continue, http://www.ictsd.org/weekly/04-07-14/story1.htm. 18. Forbes.com, Retailers Welcome Signing of AGOA Extension, http://www.forbes.com/prnewswire/feeds/prnewswire/2004/07/13/prnewswire200 407131124PR_NEWS_B_NET_DC_DCTU047.html. 19. AGOA.gov, Summary of AGOA Acceleration Act of 2004 -- AGOA III, http://www.agoa.gov/agoa_legislation/agoa_legislation3.html. 20. USINFO.STATE.GOV, Passage of AGOA III Legislation Sends Good Signal to Africa, http://usinfo.state.gov/xarchives/display.html?p=washfile- english&y=2004&m=June&x=20040625192556WCyeroC0.8061792&t=livefeed s/wf-latest.html. 21. allAfrica.com, AGOA Key To An Expanding Relationship with Africa, Says Top U.S. Trade Aide, http://allafrica.com/stories/200407020885.html. 22. AGOA.gov, General Country Eligibility Provisions, http://www.agoa.gov/eligibility/country_eligibility.html. 23. USTR Robert Zoellick, AGOA Forum: Closing Remarks, 01/17/2003. 24. USTR/USAID, African Growth and Opportunity Act: Implementation Guide, October 2000. 25. U.S. Department of Commerce: Office of Africa, U.S.-African Trade Profile, March 2002. 26. USTR/USAID, African Growth and Opportunity Act: Implementation Guide, October 2000.

65 27. U.S. Department of Commerce, About AGOA—Apparel Provisions, http://www.agoa.gov/About_AGOA/about_agoa.html. 28. AGOA.gov, Apparel Eligibility, http://www.agoa.gov/eligibility/apparel_eligibility.html. 29. USTR, Ambassador Charlene Barshefsky: American Trade Policy In Africa, D.C. Bar International Law Section, Washington, D.C. 30. The Office of the U.S. Trade Representative, 2003 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Third of Fifteen Annual Reports (May 2003). 31. The Office of the U.S. Trade Representative, 2005 U.S. Generalized System of Preferences Guidebook, http://www.ustr.gov/assets/Trade_Development/Preference_Programs/GSP/asset_ upload_file267_8359.pdf. 32. USTR Robert Zoellick, AGOA Forum: Opening Remarks, University of Mauritius, http://www.agoa.mu/speech/speech8.htm. 33. U.S. Department of Commerce, 2005 U.S.-African Trade Profile, http://www.agoa.gov/resources/US-African%20Trade%20Profile%202005.pdf. 34. The Office of the U.S. Trade Representative, 2001 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The First of Fifteen Annual Reports (May 2001). 35. Yahoo! News, Africa hopes to trade its way out of poverty after AGOA forum, http://news.yahoo.com/news?tmpl=story&u=/afp/20050718/bs_afp/africaustradea goa_050718194411. 36. IRINnews.org, AFRICA: Problems and solutions on the AGOA agenda in Dakar, http://www.irinnews.org/report.asp?ReportID=48196&SelectRegion=Southern_A frica&SelectCountry=AFRICA. 37. Open Source Center, (Unclassified) Johannesburg Business Day: Bold partnership paying off in Lesotho, http://www.fbis.gov/portal/server.pt/gateway/PTARGS_0_34846_200_240_-

66 240_43/http%3B/apps.fbis.gov%3B7011/fbis.gov/content/Display/5930984?actio n=advancedSearch&highlightQuery=eJzTcHT3d9QEAATvAWo%3D&fileSize= 9678. 38. U.S. States Senate, Testimony before the Senate Foreign Relations Committee: Walter H. Kansteiner, Assistant Secretary of State for African Affairs United States Department of State (Wednesday, June 25, 2003), http://www.senate.gov/~foreign/testimony/2003/KansteinerTestimony030625.pdf #search='agoa%20success%20stories'. 39. Open Source Center, (Unclassified) Cameroon: Blaz Design To Supply 3 Million Uniforms to US Company, http://www.fbis.gov/portal/server.pt/gateway/PTARGS_0_3486_. 40. AGOA.gov, Highlighted AGOA Success Stories: Cameroonian Swimwear Maker Rides the Wave into U.S. Market, http://www.agoa.gov/agoa_forum/agoa_success_stories1.html. 41. U.S. Department of State, Reaping The Benefits of AGOA—Caratex, http://usembassy.state.gov/paris- ars/wwwfbot1.pdf#search='Caratex%20Botswana%20agoa. 42. The Daily Star, US trade preferences to cast wide net for exports, http://www.thedailystar.net/2005/07/18/d50718051855.htm. 43. U.S. Department of State, Dynamic Commodities and AGOA, http://usembassy.state.gov/paris-ars/wwwfsaf1.pdf. 44. U.S. Department of State, Kenyan Company Secures JC-Penny and Wal-Mart Orders, http://usembassy.state.gov/paris-ars/wwwftan1.pdf. 45. AGOA.info, Country Information—South Africa, http://www.agoa.info/index.php?view=country_info&country=za#. 46. U.S. Department of Commerce, 2006 U.S.-African Trade Profile, http://www.agoa.gov/resources/US-African%20Trade%20Profile%202006.pdf. 47. U.S. Embassy in South Africa, America Invests in South Africa, http://usembassy.state.gov/southafrica. 48. International Monetary Fund, Staff Report for the 2002 Article IV Consultation: South Africa, p.6.

67 49. Automotive Industry Export Council, AGOA Guide: Non-Textile Sectors, http://www.aiec.co.za/news/20011022/the_guide.htm, p.2., 2003. 50. Corporate Council on Africa, CCA Hosts Major Forum on the Private Sector and AGOA, http://www.africacncl.org/(q0rpgezoixleie45rwpelkec)/Events/AGOA_2006.asp. 51. Bread for the World, 2006 AGOA Civil Society Forum, http://www.bread.org/learn/global-hunger-issues/agoa-forum-2006/. 52. U.S. Department of Agriculture, TRANSCRIPT OF REMARKS BY AGRICULTURE SECRETARY MIKE JOHANNS AT THE MINISTERIAL BREAKFAST FOR THE AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA) FORUM, WASHINGTON, DC -- JUNE 7, 2006, http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&c ontentid=2006/06/0199.xml.

68 CHAPTER THREE

THE GHANAIAN IMPLEMENTATION OF AGOA—A CASE Study

We can open the door and we can help build markets and the rule of law in African nations. But ultimately the responsibility [for harnessing the benefits of globalization] lies with the Africans. It is their continent. ─U.S. Representative Ed Royce1

The purpose of this chapter is to examine the dynamics of Ghana’s implementation of AGOA. The discussion in this chapter is divided into three sections. The first examines Ghana’s position in the world economy. The second reviews the history of Ghana’s trade relations with the U.S. Lastly, section three reports survey results pertaining to the attitudes and perceptions of officials from government and industry on AGOA in Ghana. Long considered the Gateway to West Africa, Ghana arguably was the best West African nation for which to conduct a case study on AGOA’s implementation record in the region.2 With over sixteen years of experience in handling a market based economy and a stable democratically elected government and president, Ghana, unlike many of its neighbors, was in 2000, viewed by some as the possible flag barer for AGOA implementation in West Africa. However, as the data will show, little progress has been made to fundamentally alter trade relations Ghana and the U.S. The purpose behind the Ghanaian—AGOA Case Study, which was approved by the Institutional Review Board for the Use of Human Subjects in Research (IRB) within the Miami University Office for the Advancement of Research and Scholarship, was to develop an overall clearer understanding of the factors that are preventing sub-Saharan Africans, and in particular, the people of Ghana, from taking full advantage of the benefits in possessing liberal access to the U.S. market through AGOA. The data collected for this study was assembled from sources within the USTR, the U.S.

1 U.S. Department of State, U.S. Lawmaker Calls for an AGOA III at Mauritius Forum, http://usinfo.state.gov/regional/af/trade/a3011701.htm, 9/9/2003. 2 Ghana’s reputation as the Gateway to West Africa is largely attributed to its abundance of both natural and human resources; the relative stability of its political system; and its commitment to private enterprise and the free market. Indeed, Ghana is fast becoming an attractive investment, business, and tourism hub in West Africa, facilitating easy access to a sub-regional market of some 250 million people.

69 Department of State, the U.S. Embassy (Accra, Ghana), and from interviews conducted with various individuals within the Ghanaian government and business community at large.3 The work advanced here represents the most up to date information available concerning the overall current state of AGOA in Ghana, its implementation, along with the perceptions of those individuals who are responsible for facilitating the U.S.- Ghanaian trade relations. Economic Outlook

Ghana plays a key role in promoting economic development in Africa, at times serving as a role model in West Africa in undertaking certain economic and other reforms. —David P. Shark, Former Deputy Chief of the U.S. Mission to the WTO4

Ghana, which is roughly the size of Oregon, and is bordered by Côte d'Ivoire, Burkina Faso, Togo, and the Atlantic Ocean, saw its economy grow by more than 5.2 percent in 2003, driven primarily by exports of cocoa, gold , and timber; GDP in 2003 totaled $7.7 billion. Ghana is endowed with an abundance of natural resources, including sizeable deposits of bauxite, diamonds, gold, and manganese; offshore deposits of crude petroleum and natural gas; and both coastal and inland fishing.5 Compared to other sub- Saharan African nations, Ghana has in recent years maintained a well-developed infrastructure of financial and transportation services, and public utilities.6 The agriculture, forestry, and fishing sectors employ roughly 60 percent of the Ghanaian workforce. Cocoa is by far Ghana’s most important cash crop, and ranked as the country’s largest source of foreign exchange in 2004. After its neighbor Côte d'Ivoire, Ghana ranks as the world’s second-largest producer of cocoa—the World Bank estimates that more than 1.6 million peasant farmers grow cocoa in Ghana. Other food and industrial crops cultivated in Ghana include bananas, cashew nuts, cassavas, cereals (corn, rice, millet, and sorghum), pineapples, and tobacco. Wood products rank as

3 Interviewees were selected in accord with their expertise in Ghanaian trade practices, involvement in the U.S./Ghanaian trade relationship, and access to the Ghanaian business community. 4 U.S. Mission to Geneva, WTO Trade Policy Review of Ghana, http://www3.itu.int/MISSIONS/US/press2001/0226tprghana.htm, 6/7/2006. 5 The World Factbook (Central Intelligence Agency), Ghana, www.odci.gov/cia/publications/factbook/print/gh.html, 6/7/2006. 6 World Bank, Ghana: International Competitiveness—Opportunities and Challenges Facing Non- Traditional Exports, Report No.22421-GH, 2001, p. iv.

70 Ghana’s third-largest export item. Marine and inland fishing is primarily for the domestic market, although small quantities of tuna and shrimp are exported.7 Ghana has a population of around 22.5 million people and an available labor force of around 10.5 million workers. The literacy rate for Ghana’s population (roughly 75%) is above the regional average, and wages for the Ghanaian labor is generally considered to be internationally price competitive.8 In terms of its exports sectors, Ghana has few controls. Ghana’s export regime provides for duty drawback and value-added tax refunds for exporters. Companies that export more than 70 percent of their products qualify as foreign trade zone (FTZ) companies. This qualification permits for both zero-duties on all imports used as production inputs and a ten-year income tax exemption.9 Despite efforts by the government to expand nontraditional exports, Ghana’s main products of export continue to consist of its traditional goods10—cocoa beans, gold, and wood products . Other key Ghanaian exports include aluminum (Ghana’s main processed mineral export), pineapples, fish products, processed wood products, petroleum products, cocoa paste and cocoa butter, and manganese (Table 15).11

Table 15

Ghana: Leading Exports (1994, 1999, and 2003) (U.S. Millions) Export Description 1994 1999 2003

Cocoa and cocoa preparations $387,353.40 $569,991.30 $883,658.40

Wood and articles of wood: $246,006.70 $212,632.50 $221,914.00 wood charcoal Edible fruit and nuts; peel of $17,416.60 $31,864.00 $97,069.60 citrus fruit or melons Aluminum and articles thereof $228,507.80 $140,322.00 $86,304.40

7 Economist Intelligence Unit (EIU), Ghana Country Profile, 2004, pp. 17, 25, and 33. 8 See World Factbook: Ghana, supra note 5. 9 See World Bank, supra note 6. 10 Ghana’s official definition of nontraditional exports, adopted in 1995, includes all merchandise exports except for cocoa beans, logs and lumber, and mining products; other exports are considered traditional. 11 See World Bank, supra note 6.

71 Edible preparations of meat, $9,935.50 $75,251.50 $82,624.60 fish, crustaceans, mollusks or other aquatic invertebrates Mineral fuels, mineral oils $28,277.90 $79,573.20 $61,990.90 and products of their distillation; bituminous substances; mineral waxes

Ores, slag and ash $30,395.90 $33,752.10 $54,297.40

Fish and crustaceans, $42,828.10 $35,608.50 $47,247.10 mollusks and other aquatic invertebrates Natural or cultured pearls, $226,928.80 $219,855.60 $37,121.80 precious or semiprecious stones, precious metals; precious metal clad metals, articles thereof; imitation jewelry; coin

Edible vegetables and certain $7,126.30 $15,797.50 $22,668.80 roots and tubers

Other $105,115.60 $272,061.70 $128,682.80

Total $1,329, 842.60 $1,686,709.90 $1,723,579.80

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, 6/7/2006.

The continued growth and development of Ghana’s tourism sector is an important component of its long-term economic development strategy. Ghana’s annual tourism receipts nearly doubled between 1998 and 2002 to $520 million, with the number of annual tourist arrivals increasing steadily to more than 482,000 as of 2002.12 EIU reports that tourism in Ghana is mainly supported by tourists from the United Kingdom (UK), the U.S., Germany, and France. 13 The Ghanaian government is also encouraging investment in historic and cultural areas such as in beach and lakefront areas in order to

12 African Development Bank/Organization for Economic Cooperation and Development, Ghana: African Economic Outlook, 2003, p. 166. 13 See EIU, Ghana Country Profile, supra note 7.

72 enhance the country’s image as the most likely destination of choice for tourists to West Africa.14 Historically, the E.U. has been the leading export market for most Ghanaian goods, with the U.K., France, the Netherlands, and Germany representing the top EU trade partners, followed by Japan and Italy (see Table 16).15 The Netherlands is the largest market for Ghana’s cocoa beans, processing much of the country’s cocoa, and accounting for 22 percent of Ghanaian 2002-03 exports of cocoa beans, by value.16 Other leading cocoa bean markets include the UK (14 percent), Japan (13 percent), and Turkey (11 percent); the U.S. accounts for less than one percent cocoa exports.17 Italy, the U.S., and France are the largest export markets for Ghana’s timber.18 However, Germany and the U.S. represent the only major international markets in which Ghanaian exports declined during 1994-2003.

Table 16

Ghana: Leading Export Markets (1994, 1999, and 2003) Market 1994 1999 2003

United Kingdom $212,760.90 $248, 477.00 $234,382.90

France $94,677.50 $100,717.90 $176,762.70

Netherlands $71,834.20 $196,786.90 $172,324.70

Germany $241,613.00 $108,565.70 $131,895.00

Japan $63,238.00 $66,165.90 $117,273.30 Italy $83,195.60 $189,985.40 $101,462.40

United States $205,219.90 $219,436.50 $93,228.20 Turkey $4,299.30 $18,157.20 $91,131.50

14 GIPC, Ghana Investment Profile: Travel and Tourism, www.gipc.org.gh, 6/7/2006. 15 From 1872 to 1957, the United Kingdom controlled Ghana, formally the Gold Coast, as one of its many colonies. In the post independence era, the U.K. has established itself as the principle trade and investment partner with Ghana. 16 See EIU, Ghana Country Profile, supra note 7, at p.47. 17 Ghana Cocoa Board, Cocoa Bean Exports by Destination, www.gipc.org.gh, 6/20/2006. 18 Ghana Forestry Commission: Timber Industry Development Division, Ghanaian Timber Statistics, www.ghanatimber.org, 6/20/2006.

73 Spain $40,001.70 $47,737.10 $86,339.30 Belgium Not Available $77,667.30 $81,886.50

Other $323,002.60 $413,013.00 $436,893.30

Total $1,329, 8842.60 $1,686,709.90 $1,723,579.80

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect gold exports.

Source: World Bank, World Integrated Trade Solution database, 6/20/2006.

Despite a relatively favorable business climate, Ghana, when compared to the regional average (Table 17), is as good as or better than most countries in sub-Saharan Africa, nonetheless suffers from several notable domestic and internal barriers that continue to negate the expansion of various revenue-generating sectors within the Ghanaian economy. To begin with, the time required to register property in Ghana is more than three times the regional average. In light of its better-than-average property rights score, several foreign investors have indicated that they have found it difficult to settle expensive-longstanding investment and trade disputes with the government.19 In addition, Ghana’s high import tariffs, which are reflected by its low trade policy score (Table 18), are below the regional average.

Table 17

Ghana: Business Environment Ghana Regional Average Closing a business: Cost 18.0 20.5 (percent of estate) Closing a business: 28.2 17.1 Recovery rate (cents on the dollar) Closing a business: Time 1.9 3.6 (years) Getting credit: Cost to 37.9 41.8 create collateral (percent

19 U.S. Department of State telegram, Ghana: Response to Request for Information for USITC Study on Export Opportunities and Barriers in AGOA-Eligible Countries, message reference No. 08545, prepared by U.S. Embassy (Ghana), 2/17/2005.

74 of income per capita) Getting credit: Credit 2.0 2.1 information index Getting credit: Legal rights 5.0 4.6 index Getting credit: Private 1.0 39.4 bureau coverage (borrowers per 1000 capita) Getting credit: Public 0.0 1.1 credit registry coverage (borrowers per 1000 capita) Enforcing contracts: Cost 14.4 43.0 (percent of debt) Enforcing contracts: 23.0 35.0 Number of procedures Enforcing contracts: Time 200.0 114.0 (days) Registering a property: 7.0 6.0 Number of procedures Registering a property: 4.1 13.2 Cost (percent of property value per capita) Registering a property: 382.0 114.0 Time (days) Starting a business: 12.0 11.0 Number of procedures Starting a business: Cost 87.5 225.2 (percent of income per capita) Starting a business: 31.4 254.1 Minimum capital (percent of income per capita) Starting a business: Time 85.0 63.0 (days) Employment: Difficulty of 50.0 50.6 firing index Employment: Difficulty of 11.0 53.2 hiring index Employment: Firing costs 25.0 59.5 (weeks) Employment: Rigidity of 34.0 56.0 employment index Employment: rigidity of 40.0 64.2 hours index

75 Import tariffs Simple average of ad valorem duties (Ghana, applied rate, 2000) All goods……………………………………………………… 14.6 Agricultural goods………………………………………... 20.1 Nonagricultural goods……………………………………. 13.8 Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, 7/8/2006; and WTO, “Country Profile,” Nov. 2004, at http://stat.wto.org/CountryProfile, 7/8/2006.

Table 18

Ghana: Economic Freedom Ghana Regional Average 1995 Overall score 3.5 3.6 2000 Overall score 3.2 3.7 2005 Overall score 3.3 3.4 Trade policy score 4.0 3.9 Fiscal burden of government 3.0 3.9 score Government intervention in the 1.5 2.6 economy score Monetary policy score 5.0 2.4 Capital flows and foreign 3.0 3.2 investment score Banking and finance score 4.0 3.2 Wages and prices score 3.0 2.8 Property rights score 3.0 3.7 Regulation score 3.0 3.7 Informal market activity score 3.5 4.1 (Heritage Foundation data cover 42 of the 48 sub-Saharan African countries; it does not include Comoros, Eritrea, Liberia, Sao Tome & Principe, Seychelles, and Somalia)

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database, www.heritage.org, 7/8/2006.

In terms of impediments to export led growth, the World Bank reports that inefficient document handling and complicated paperwork requirements lead to frequent delays and inefficiency. The Bank indicates that exporters should expect frequent delays in receiving duty drawback and value-added tax refunds on imported inputs when dealing with the Ghanaian government. It was also reported that the absence of market research

76 and effective marketing, as is the case with most countries in the region, continues to impede the quality of Ghanaian exports.20 Barriers in Ghana’s financial sector include high transactions costs, high interest rates, neglect of small to medium sized businesses on the part of commercial banks, and bank preferences for short-term financing over longer-term investments.21 According to a U.S. Department of State telegram, the high costs of local financing inhibits the expansion of most Ghanaian businesses beyond their current micro-scale operations, rendering most manufactures incapable of meeting the demands of large international wholesalers and retailers.22 Other reported impediments include high costs for electricity; dilapidated roads and highways, which impede the timely delivery of goods across the country, especially during the rainy season; congestion at Ghana’s ports and national airport; high freight rates; and the limited network of cold storage facilities, increases the likelihood that perishable goods, such as fruits and vegetables, will spoil between the time of harvest and export.23 In general, Ghana’s transportation and public utilities infrastructure is satisfactory in terms of regional standards (Table 19), but needs extensive improvements.

Table 19

Ghana: Infrastructure-Related Indicators MRY(1) Roads, total network (km, 2001) 46,179.0 Roads, paved (percent of total roads, 2001) 18.4 Transport services (percent of service 20.7 exports, 2002) Transport services (percent of service 43.0 imports, 2002) Fixed line and mobile phone subscribers 33.4 (per 1,000 people, 2002) Internet users (per 1,000 people, 2002) 7.8 Mobile phones (per 1,000 people, 2002) 20.7

20 World Bank, Ghana: International Competitiveness-Opportunities and Challenges Facing Non- Traditional Export, Report No. 22421-GH, 2001, pp.44-45, 58. 21 See EIU, Ghana Country Profile, supra note 7 at pp.41-42. 22 See U.S. Department of State telegram, supra note 19. 23 See World Bank, Ghana: International Competitiveness, supra note 20 at p.56.

77 Telephone mainlines (per 1,000 people, 12.7 2002) Electric power transmission and 14.7 distribution losses (percent of output, 2001) Energy imports, net (percent of commercial 26.7 energy use, 2001) (1) Most recent year for which data are available between 1999 and 2003.

Source: World Bank, “World Development Indicators,” http://devdata.worldbank.org/dataonline, 7/9/2006.

One of the most underreported factors that are currently undermining the future competitiveness of all Ghanaian sectors is the abundant supply of unskilled labor—the country’s skilled labor force is in short supply. The shortage of a highly skilled workforce also limits the ability of Ghanaian producers to improve the quality of their products and focus on more sophisticated processed goods.24 U.S.-Ghanaian Trade Relations

Quality products and reasonable pricing aside, a degree of time consciousness is the requirement needed in order for Ghana to ultimately benefit from the AGOA initiative. ─Dr. Kofi K. Apraku, Former Minister of Trade and Industry (Ghana)25

As was mentioned earlier, the bulk of Ghana’s international trade has focused on E.U. countries, however, in recent years; Ghana’s trade with the U.S. has grown to become increasingly significant. Although the United Kingdom continues to remain Ghana’s largest trade partner, the U.S. has over the last few years grown to become the country’s third largest trade partner (behind Japan and the EU).26 As Table 20 displays, the U.S. trade surplus with Ghana was $128 million in 2003, representing an increase of $51 million from the $76 million surplus in 2002. U.S. exports to Ghana in 2003 were $209 million, up 8.7 percent from the previous year, and U.S. imports from Ghana were $82 million, down 29.6 percent. U.S. exports to Ghana in 2004 were estimated at just over $308 million, making Ghana the fifth largest export market for the U.S. in sub-

24 See EIU, Ghana Country Profile, supra note 7 at p.5. 25 Kofi K. Apraku, Massive export drive needed to push economy, Ghanaian Times, 8/9/2003. 26 The U.S. Commercial Service, Ghana Country Commercial Guide 2002, http://www.usatrade.gov/website/ccg.nsf/CCGurl/CCG-GHANA20, 10/7/2003.

78 Saharan Africa.27 Ghana is currently the 91st largest export market for total U.S. goods. U.S. FDI in Ghana in 2002 totaled $264 million, down from $295 million from 2001.28

Table 20

Trade Between The U.S. and Ghana (1999-2004) (U.S. $ Million)

350 300 250 200 U.S. Exports 150 U.S. Imports 100 Trade Balance 50 0 -50 1999 2000 2001 2002 2003 2004

Source: Agoa.info-website: http://www.agoa.info/?view=country_info&country=gh, 8/2/2005.

Ghanaian exports to the U.S. remain heavily concentrated on forest, agricultural, aluminum (Ghana’s main processed mineral export), energy-related products, and various precious minerals and raw metals.29 Ghana’s eligible exports through AGOA in 2002 amounted to $34.8 million, down $8 million from the previous year; trade was heavily dominated by the sale of chemicals and energy-related products.30 As of 2004, Ghana’s exports through AGOA and its GSP provisions were valued at $74 million, representing

27 The U.S. Commercial Service, Doing Business In Ghana—Country Commercial Guide (CCG), http://www.buyusa.gov/ghana/en/40.html, 8/2/2005. 28 Office of the United States Trade Representative, 2004 National Trade Estimate Report on Foreign Trade Barriers—Ghana, http://www.ustr.gov/assets/Document_Library/Reports_Publications/2004/2004_National_Trade_Estimate/ 2004_NTE_Report/asset_upload_file781_4767.pdf, 8/2/2005. 29 AGOA.info, Country Information-Ghana, http://www.agoa.info/?view=country_info&country=gh, 8/9/2005. In 2002, Ghana was the fifth-largest market for U.S. exports and the 14th largest market for U.S. imports in sub-Saharan Africa. 30 Id.

79 53 percent of Ghana’s total exports to the United States.31 Although exports of textiles and garments are at present insignificant when compared to other goods exported to the U.S., Ghanaian President John A. Kufuor is nonetheless optimistic that with introduction of the Gateway Project in 2001—a special initiative that was created to make the Ghanaian private sector the principle engine of growth in Ghana—this sector will in the future will ultimately begin to thrive.32 The Gateway Project has facilitated the enhancing of trade facilities, in particular, the renovation of Ghana’s many ports and harbors. The Project led has led to the creation of a new government department that is designed to assist investors who whish to relocate to Ghana and export at least 70 percent of their products. Tawia Akyea, the Executive Secretary of the Ghana Exports Promotion Council, commentated in 2003 that many of the initiatives sponsored by the Gateway Project, along with those of the Ghana Civil Aviation Authority’s development of Kotoka International Airport (Accra, Ghana), have bolstered the country’s infrastructure, and laid the groundwork necessary for successful trade in the future.33 The Gateway Project also seeks to promote greater trade with the U.S. and the nations of Europe. The Project’s statute of incorporation calls for the development and promotion of all of Ghana’s exports—not just nontraditional exports. Products that are deemed as under developed for export receive special technical and design assistance to prepare them to meet the demands of competitive regional and global markets. Dr. Apraku contends that initiatives such as the Gateway Project will help Ghana to reach its objective of becoming a middle-income earning nation by the year 2020.34 In March of 2003, Ghana’s most recent past Minister of Trade & Industry, Dr. Kofi K. Apraku, created the National Oversight and Implementation Committee on AGOA (NOIC-AGOA), which is made up of a committee of fifteen members that works

31 The Office of the U.S. Trade Representative, 2005 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The fifth of Fifteen Annual Reports ( May 2005), p.88. 32 See AGOA.info, supra note 29. 33 World Investment News, Report on Ghana, Enhancing Trade and Accruing Investment, www.winne.com/ghana4/cr01.html, 6/20/2006. 34 Id.

80 to coordinate all national implementation efforts with the AGOA Secretariat.35 Dr. Apraku also announced that in order to avoid exporting less than adequate products abroad, especially to the E.U. and U.S., that with help of the United Nations Industrial Development Organization (UNIDO), a textile and garment training center would be set up at the Accra Technical and Training Center.36 In terms of the impediments to increased trade between the U.S. and Ghana, Deputy USTR Jon Hunstman, in speaking at the opening of the Ghana Investment Promotion Forum (GIPF) held in 2003, commentated that “Ghana must move beyond the exportation of traditional goods and primary commodities and into the value-added market in order to diversify trade with the U.S.”37 In July of 2005, the USTR released for the first time a report detailing the competitiveness of individual AGOA eligible countries: African Growth and Opportunity Act Competitiveness Report. As Table 21 demonstrates, the USTR has identified nine critical areas that it believes represents an impediment to the expansion of Ghana’s trade relations with the U.S. through AGOA. These trade impediments, as defined by the USTR include the following:

Table 21

Ghanaian Barriers To Trade With The U.S.

35 Kofi K. Apraku, Apraku outlines measures to boost trade, Ghanaian Times, 3/10/2003. The NOIC- AGOA now consists of seventeen members from both the public and private sectors. 36 With the help of the UNIDO, another training center has been established in the Volta Region at the Volta Garment Training Center. The training center will provide skills for seamstresses and tailors so that they can begin to export their work to the U.S. under AGOA. 37U.S. Department of State, AGOA Is Opportunity Ghanaians Are Grasping, Official Says, http://usinfo.state.gov/regional/af/trade/a3032101.htm, 9/7/2005. The Ghana Investment Promotion Forum (18-20 November 2003), which was co-sponsored by UNIDO and the Ghanaian government, facilitated cross-Atlantic networking between members of the Ghanaian business community (who were seeking foreign partners for investment projects), foreign corporations (wanted to study potential investment opportunities in Ghana), and various international aid-agencies and institutions.

81 Business Environment · Time required to register a property is more than three times the regional average · Some members of ECOWAS assess duties and quotas on Ghanaian exports that should be duty and quota free—creating a barrier to trade · Currency conversion complications between the Ghanaian cedi and the CFA franc (used by francophone states in ECOWAS) add costs to cross-border transactions and impede regional trade · USTR reporting suggest that there is a lack of transparency in government operations

Transportation/Customs · The poor quality of roads impede the timely delivery of goods · Other impediments include congestion at Ghana’s ports and airport; high freight rates; and the limited network of cold storage facilities · Customs-related impediments include inefficiencies and delays because of paperwork requirements and inefficient document handling · Exporters report delays in receiving duty drawback and value- added tax refunds on imported inputs

Capital · Commercial banks tend to focus on high-income customers and large businesses, to the detriment of small and medium-sized enterprises (SMEs) · Banks have high transactions costs, high real interest rates, and display a preference for short-term finance over long-term investment finance · The high cost of local financing is a significant constraint

Labor · Skilled labor is in short supply—unskilled labor is abundant · The shortage of skilled labor limits the ability of Ghanaian producers to improve their product quality and focus on more sophisticated processed and downstream products; overall, unskilled labor limits the country’s future competitiveness across all sectors

Agriculture · Agriculture sector is dominated by smallholder plots characterized by traditional, non-mechanized land-use methods, with few large- scale farms and plantations · Ghana’s complex land tenure system makes it difficult to establish clear title · Poor feeder roads in rural areas limit the movement of agricultural and forestry products to processing centers and ports · Ghanaian exports are also hindered by their inability to meet E.U. and U.S. sanitary and phyto-sanitary standards38

38 The phyto-sanitary standards reference refers to Ghana’s inability to attain phyto-sanitary certificates for many of the plant products it exports to markets in the E.U and U.S. A Phyto-sanitary certificate documents the origin of the shipment and confirms inspection in the country of origin by a member of that country's national plant protection organization; this helps ensure that the shipment of plant commodities are free of injurious pests and diseases. The certifying country usually charges a fee for providing these certificates. Phyto-sanitary certificates are governed under the International Plant Protection Convention (IPPC), a multilateral treaty acknowledged by the WTO as the source for international standards for phyto-

82 Fisheries · Stable and reliable supplies of electricity and water remain problematic · Tuna exporters report having problems with respect to customs clearance delays and note that, although shipping time has improved since 2000, document clearance time has increased, resulting in the early arrival of Ghanaian vessels in European ports ahead of the documents

Wood and Wood · Poor forest management policies put Ghana in danger of depleting Products its forest resources · Furniture export productivity is low by international standards due in part to the use of outdated equipment and inadequate access to the financing needed to upgrade production

Tourism · Ghana’s tourism sector is both undercapitalized and underdeveloped · Ghana’s tourism resources are constrained by the shortage of four- star and above hotels and lodging

Other Key Factors · The absence of market research, poor marketing, and high electricity prices and brown-outs during times of low rainfall due to reliance on hydro-power, also were reported as impediments to Ghanaian exports

Source: African Growth and Opportunity Act Competitiveness Report website: http://www.ustr.gov/assets/Document_Library/Reports_Publications/2005/asset_upload_file604_7857.pdf# search='barriers%20to%20trade%20AGOA:%20ghana', 9/10/2005.

Interview Results

AGOA is a tool—a sort of screwdriver that is useful for many things. It should be used with finesse and strength; and be guided by a well developed logistical plan in order to generate wealth. Anonymous U.S. Embassy (Ghana) Official39

As was mentioned in chapter one, interviews were conducted in June and July of 2005 with personnel form each of the trade-related organizations described in the Research Approach section of this dissertation. The questionnaire that was used to organize the interviews may be found in Appendix A. All interviews were conducted in English. To summarize the survey instrument briefly, it should be noted that it included questions designed to cover eight types of issues and problems confronted by the

sanitary measures affecting trade. Phyto-sanitary certificates are recognized as an internationally accepted form of pest risk mitigation. 39 Anonymous U.S. Embassy (Ghana) Official, Interview with Keith E. Noble, 6/13/2005

83 Ghanaian government and Ghanaian export community pertaining to the implementation of AGOA in Ghana. These issues and problems included those relating to: (1) procedural, (2) knowledge, (3) assistance, (4) burden, (5) cooperation, (6) appeal, (7) conformity, and (8) general questions. From the outset, it should be noted that several interviewees hesitated to answer some questions, citing the sensitive nature of the issue to Ghanaian national interests. For the most part, those who responded in this way expressed concern that their answers to certain questions might subject them to harsh reprisals on the part of their superiors and colleagues. Some interviewees also were apprehensive that their comments might lead U.S. investors to believe that Ghana is ill prepared to protect foreign investments. In other cases, selected questions were omitted from interviews because they were found to be beyond the area of specialization of the respondent. For interviewees expressing concerns about Ghanaian national interests, the interview procedure was adjusted to allow the respondent to make a statement regarding the information they were prepared to share with the researcher. These statements were made after the interviewee examined the questionnaire and had discussed with the researcher the types of information that were sought. Hence, those making statements received guidance from the researcher that encouraged them to provide as much information as possible. For reasons of confidentiality, only one of the names of the individuals who were interviewed was not disclosed. The rest of the interviewees are identified by the title they hold within their respected organizations. Among the government agencies examined, the following people were interviewed: (1) Dr. Alan Kyeremanteng: Ghanaian Minister of Trade, Industry (GMTI), and Presidential Initiatives. Dr. Kyeremanteng is also head of the National AGOA Secretariat40, (2) Anonymous: Foreign Service Officer, U.S. Embassy (Accra, Ghana)41. In private industry, the interviewees included: (1) Vick Cooper: President, U.S. Chamber of Commerce (USCC) in Ghana42,

40 Dr. Kyeremateng, Interview with Keith E. Noble, 6/17/2005. The AGOA Secretariat was created in 2002 by Ghanaian President J.A. Kufuor for the purpose of coordinating all AGOA related activities in Ghana. 41 See Anonymous U.S. Embassy (Ghana) Official, supra note 39.

84 (2) Godfried Funkor: Research and Training Specialist, Ghana National Chamber of Commerce and Industry (GNCCI)43, (3) J.E.B. Haizel: Trade Specialist, Sigma One Corporation44, (4) Abar Sartarr: Chief of Party, Sigma One Corporation45, (5) David Yawson: Business Development Specialist, Federal Association of Ghanaian Exporters (FAGE)46. The results of the interviews are organized according to issue. Hence, the procedural-related answers from government and private-industry respondents are discussed first, followed in turn by answers pertaining to the questions about knowledge, assistance, burden, cooperation, and so forth. Following the presentation of the results, the implications for U.S.-Ghanaian trade relations are considered. Procedural Questions The procedural part of the questionnaire examines the degree to which respondents are aware and understand AGOA’s details and procedures. In particular, this section seeks to determine (1) whether Ghanaian officials feel comfortable with AGOA procedures, (2) whether the U.S. has provided adequate information on AGOA, and (3) the general awareness of AGOA in Ghana. This was the only part of the questionnaire that all seven respondents felt comfortable addressing. When asked about their comfort level with AGOA procedures, several of the respondents suggested that Ghanaian trade officials have difficulty in understanding all of the nuances of the trade Act. The anonymous U.S. Embassy official attributes much of the Ghanaian uneasiness with AGOA procedures to the lack of access to AGOA educational materials, which in the respondents’ opinion, impedes the success

42 Vicky Cooper, Interview with Keith E. Noble, 6/17/2005. 43 Godfried Funkor, Interview with Keith E. Noble, 6/9/2005 44 J.E.B. Haizel, Interview with Keith E. Noble, 6/11/2005. Sigma One Corporation works with governments and regulatory bodies across the world in the effort to promote business-friendly environments, as well as to service entrepreneurs in order to provide them with the business and technical know-how needed to exploit favorable economic conditions and expanded market opportunities. Sigma One Corporation has assisted enterprises in their attempts to improve market performance in over thirty countries: Africa, Latin America, Asia and the Middle East. 45 Abar Sattar, Interview with Keith E. Noble, 6/11/2005. 46 David Yawson, Interview with Keith E. Noble, 6/19/2005. FAGE is a private, non-governmental organization of Ghanaian exporters and exporter associations. Its primary goal is to provide technical/informational services, and provide facilitation for transactions between Ghanaian firms and their global partners.

85 of AGOA in Ghana. Godfried Funkor suggested that trade officials (Ghanaian) initially felt very good about AGOA provisions, but that overtime, the complexity of its rules and regulations ultimately overwhelmed most public and private sector administrators. David Yawson on the other hand seemed to be more optimistic with regard to Ghanaian comfort levels with AGOA procedures. Yawson is of the opinion that trade officials and business executives are beginning to better understand the ins and outs of AGOA. He suggests that the training government officials are currently undergoing will help them to better educate Ghanaian exporters on how to do business with the U.S. through AGOA. The majority of respondents seem to believe that the U.S. has readily made available information pertaining to AGOA details and procedures. Vicky Cooper argues that the USCC has taken every opportunity to participate in AGOA awareness discussions. Cooper cited the creation of the AGOA help desk in Accra in 2003 as an example of how the Chamber is working to help Ghana become more proficient with AGOA procedures.47 The anonymous U.S. Embassy official mentioned that the Embassy’s numerous AGOA info exchanges—four took place in 2005—have overtime helped to improve Ghanaians understanding of AGOA. The Embassy official also stated that most Ghanaian stakeholders have participated in the quarterly exchanges. Funkor however suggested that while it may be the case that the U.S. is making a concerted effort to promote AGOA in Ghana, the facts on the streets suggests that average man-woman still has a limited understanding of how to make AGOA work for them. Finally, as far as the awareness of the Ghanaian business community of AGOA, government and private interviewees alike seemed to express concern in regard to this question. The GNCCI respondent explicitly stated that awareness of AGOA in Ghana is low. Similarly, the FAGE representative stated that the problems associated with Ghanaians lack of awareness stem from the fact that government officials are themselves not fully aware of AGOA procedures; and thus, most of the population views AGOA as an aid program as opposed to a trade act. As far as the anonymous official at the U.S. Embassy was concerned, the business community in Ghana is fully aware of AGOA.

47 The AGOA help desk was designed to serve as the one-stop shop for AGOA related information in Ghana. The desk also serves as link for Ghanaian exporters with agencies and buyers in the U.S.

86 However, the official indicated that Ghanaians generally were not ready to focus on large-scale international trading. The official commented that “the concept of expanding the trade-pie has not yet fully taken root here in Ghana.” Knowledge Questions This group of questions was designed to examine the Ghanaian government’s capabilities in implementing AGOA in Ghana. Beyond this, the questions seek to determine (1) whether the Ghanaian government has a sufficient staff of trained specialists who understand U.S. customs laws, and (2) the degree to which the government and private sector depends on foreign experts to handle AGOA related issues. The three respondents that felt comfortable in answering questions in this group were all representatives of the private sector. The three respondents unanimously expressed that the Ghanaian government needed help in establishing a well trained staff of officials who are capable of understanding U.S. customs laws. Abar Sartarr indicated that Ghanaian customs officials are lagging behind in this area, but that his corporation, Sigma One, has begun to assist them in their efforts to learn more about AGOA and U.S. customs related regulations. Godfried Funkor felt that the greatest impediment to Ghana in securing professional staff that has expertise in U.S. customs laws is the lack of funding. In his opinion, “the monies needed to support such a staff are not available.” In discussing the frequency with which Ghanaians rely on outside experts to assist them in the handling of AGOA related issues, Vicky Cooper noted that the Ghanaian government and most small to medium sized businesses rely on American trained lawyers in Ghana to help them navigate through U.S. customs requirements. Mrs. Cooper also suggested that the number of lawyers who provide such assistance are small in numbers, and are not used on a regular basis. Sartarr and Funkor also indicated that Ghanaians have begun to use organizations such as the USCC to help them better understand U.S. customs regulations. Assistance Questions This collection of questions deals with how the Ghanaian government aids Ghanaian firms in conducting trade with the U.S. through AGOA. In particular, the questions asked (1) whether the Ghanaian government assists Ghanaian companies in

87 understanding AGOA regulations, (2) whether there have been any efforts by the government to conduct AGOA training seminars, and (3) if written materials such as booklets have been made available by the government that explain how to conduct trade through AGOA. Beginning with the question related to the Ghanaian government’s attempts to assist Ghanaian businesses in acquiring more information on AGOA regulations, the official from the U.S. Embassy commentated that the Kufuor led government has made great strides to help the business community better understand AGOA regulations, but noted that these efforts have been strained by the lack of resources and information. David Yawson cited his participation in the AGOA Professional Development Program (APD), which is sponsored jointly by the CCA and participating sub-Saharan African nations, as a clear example of the high priority that the Ghanaian government places on assisting private enterprise in all matters pertaining to AGOA advancement.48 APD helps to facilitate viable two-way trade relationships between the U.S. and sub- Saharan Africa by exposing African business leaders to American business practices and trade associations.49 In April of 2003, Mr. Yawson traveled with the Ghanaian delegation to the U.S., where he conversed with his American counterparts at the Department’s of State and Agriculture on topics such as efficacy guidelines and trade.50 According to Yawson, “programs such as APD will eventually help to close the gap between American and Ghanaian understandings of business and trade.” As for the future of the Program, he indicated that it was his hope that similar interactions of this sort will in the future occur on a more frequent basis. The next question focused on efforts by the Ghanaian government to conduct AGOA training seminars. Dr. Alan Kyeremateng cited a January 2005 GMTI outreach workshop as an example of the government’s commitment to encourage AGOA

48 Founded in 1993, CCA has since grown to become the leading American nonprofit, tax-exempt organization dedicated to enhancing trade and investment ties between the U.S. and the African continent. The American companies that make up CCA represent nearly 85 percent of all U.S. private sector investment in Africa. 49 The African Growth and Opportunity Act (AGOA) Professional Development Program, AGOA Handout, 6/10/2003. 50 APD participants took part in six intensive study courses on AGOA in Washington, D.C. These courses are currently being followed by 16 workshops in Africa that look to explain the benefits of AGOA to additional African businesses and government leaders.

88 participation in Ghana. The four-day awareness workshop was held in Ghana’s Central and Western regions. According to Dr. Kyeremateng, about 110 participants attended the workshop in each region, and that roughly ninety percent of the attendees expressed to him that the workshops had exceeded their expectations. The workshop was successful in attracting participants from the textile and garments industry, the agricultural sector, as well as representatives from the handicraft and soap manufacturing sub-sector.51 Dr. Kyeremateng hopes to hold similar workshops in the near future in the Upper East, Upper West, and Northern regions of Ghana; he indicated that these were the only reaming regions not to have undergone AGOA awareness training. He concluded his comments on this question by arguing that “it will take a national grassroots movement in order for Ghanaians to attain the maximum benefits from the AGOA initiative.” The U.S. Embassy official also recognized that the Ghanaian government is making credible advances in terms of its AGOA seminar training. The official suggested that the seminars, which are geared to covering different areas of AGOA implementation, have helped to foster better cooperation between the government and business community. David Yawson believes that the government’s increased cooperation with the private sector, in terms of AGOA seminars, has gone a long way in building trust between the two. He feels that the government should continue to work hand-in-hand with selected industries using the seminar format, because in his opinion, “it helps businesses grow so that they can be more competitive in the international market.” On the other hand, some of the other respondents seemed less than enthusiastic about the Ghanaian governments’ seminar record. Abar Sartarr complained that government sponsored seminars on AGOA occur too infrequently. He also commented that not only do the seminars occur on a less than frequent basis, but that the government took “far too long” to begin organizing AGOA seminars with the private sector. According to Sartarr, the first government led seminar did not take place until late 2002. Vicky Cooper argued that the current seminar format was far overdue for a re- haul. She contends that seminars should be restructured so that they educate Ghanaian

51 Ministry of Regional Co-operation and NEPAD, Set up AGOA related projects with part of District Assembly Funds, http://www.planning.gov.gh/acb_news_details.cfm?EmpID=240, 7/16/2005.

89 businesses on how to fill out visa applications and improve quality control. Cooper also went on to say that AGOA seminars should encourage Ghanaian traders to move to the next level, that is, “Ghanaians need to begin to understand the tastes of American buyers.” As she sees it, “buyers in America are going to be the ones that make Ghanaian business more suitable for conducting business in the U.S., thus, the seminars should reflect this reality.” In terms of the Ghanaian governments’ ability to make available written materials covering AGOA related information, Dr. Kyeremateng boasted that his Ministry’s brochures have helped to expand AGOA awareness in Ghana. He was of the opinion that GMTI brochures effectively outline all of the pertinent details associated with AGOA requirements for export, and that the brochures attempt to answer most general questions that potential exporters may have.52 However, some of the respondents disagreed with Dr. Kyeremateng’s positive assessment of the Ghanaian governments’ brochure program. Abar Sartarr explained that the Ghanaian government has done little with regard to AGOA printings and booklets. As he sees it, “most Ghanaians receive info on AGOA through seminars sponsored by the U.S. Chamber.” The anonymous U.S. Embassy official suggested that the absence of resources was the primary reason why there are not enough printed and written materials on AGOA in Ghana. Burden Question These question deals with the legal costs associated with managing of AGOA. The focus is on financial costs incurred by the Ghanaian government in soliciting legal representation for trade issues associated with AGOA. Unfortunately, six of the seven respondents when asked the question, how much does the Ghanaian government spend in legal representation related to AGOA?, indicated that it fell out of their purview. Dr. Kyeremateng, the Ghanaian Minister of Trade and Industry, declined to answer any questions that dealt with the specifics of GMTI legal expenses associated with AGOA. Cooperation Questions

52 See Appendix (B) Ghana Ministry of Trade & Industry Brochure: Prime & Focused Investment Destination for AGOA (African Growth and Opportunity Act) and Appendix (C) New Export Opportunities Under The African Growth and Opportunity Act (AGOA) for examples of brochures sponsored by GMTI.

90 This part of the interview attempted to examine the degree to which the Ghanaian government and Ghanaian corporations willingly supply USTR officials with information required for their investigations. With this as our starting point, only two of the respondents indicated that the government regularly cooperates with U.S. authorities in their investigations. None of the remaining five respondents answered questions in this section of the questionnaire. Godfried Funkor noted that the government relies heavily on the GNCCI to provide the USTR with info on their trade procedures and regulations. However, when pressed by the author to elaborate on the degree to which the government relies on GNCCI, Mr. Funkor declined to do so. The U.S. Embassy official explained that Ghanaian officials closely monitor the country’s eligibility status under AGOA, and that the government goes out of its way to ensure that companies in Ghana fill out all of the proper forms required by the USTR. Appeal Question This question is designed to measure the confidence with which officials believe that AGOA will substantially alter the trade relationship between the U.S. and Ghana. Almost all of the respondents provided negative responses to this question. For example, J.E.B. Haizel explained that the reason why AGOA has not changed the trade relationship between the U.S. and Ghana is because “market access is not the key—we cannot take advantage of it right now.” As opposed to searching for access to Western markets, Haizel contends that Ghanaians should look to develop new industries that will be more competitive globally in the future. Haizel concluded that “since Ghana is currently limited by the number of industries in which it is competitive, AGOA will do little to elevate the trade sector here in Ghana for some time.” Another respondent, Vicky Cooper, was adamant in suggesting that Ghana will not have take full advantage of AGOA by the end of the decade and thus, will not have diversified its trade relationship with the U.S. She however believes that AGOA is not to blame, rather, she states, “the problem here in Ghana is that Ghanaians have little understanding of how business is conducted in the international community.” Cooper goes on to note that “labor is not accustomed to the Western style of business, and that

91 Ghana’s infancy in the free market based economy system—representing a little more than thirteen years—hurts its chances of taking advantage of AGOA before 2010.” For David Yawson, who like the other respondents doesn’t believe that AGOA will substantially change the trade relationship between the U.S. and Ghana in the near term, the issue that most concerned him was whether the country’s participation in the trade Act will jumpstart the “domestic learning process.” In particular, Yawson hopes that AGOA will teach Ghanaians to “place a high priority on the building of infrastructure; increasing factors of production; and developing better quality control standards.” He suggested that Ghanaians cannot think about doing “serious business with Americans through AGOA until these domestic issues have been addressed.” Only two respondents, Abar Sartarr and Dr. Kyeremateng , believed that Ghana can improve its trade relationship with the U.S. through AGOA. According to Sartarr, “timing is the key.” In particular, he suspects that so long as President Kufuor is able to maintain the current atmosphere in Ghana, in which trade export expansion remain a high priority for the government, the country will eventually be primed to negotiate better terms of trade with the U.S. and other international actors. Dr. Kyeremateng lamented that PTAs such as AGOA are “one of the most effective ways to fast track the economic integration of Africa because they pave the way for the continent to be integrated into the global marketplace.” He further stated that “with all of its imperfections, the multilateral trading system under the WTO still remains the most transparent, predictable and secure way to expand free and fair trade among all nations.” In speaking on the appeal of AGOA in particular, Dr. Kyeremateng argued that it “provides the best opportunity for all of Africa, and Ghana specifically to be connected to the largest consumer-driven economy in the world—the United States.” He couched his comments by suggesting that despite its inherent advantages, African governments should view AGOA as a “necessary condition,” but “not sufficient” in and of itself, to achieve full economic development in Africa. Conformity Questions These questions seek to examine the level of commitment of the Ghanaian government to AGOA in Ghana. When asked about the effectiveness of the

92 implementation of AGOA in Ghana, the U.S. Embassy official responded by saying that the Act has helped Ghana to improve the quality of products that it sends to the market by forcing them to concentrate on quality issues such as efficiency. The official further stated that that AGOA’s effectiveness has given the “Ghanaian business people a new lens with which to look through when it comes to doing business abroad.” With respect to the role the U.S. government has played in terms of AGOA implementation in Ghana, Godfried Funkor noted that much more can and needs to be done. He cited three areas of opportunity in which the U.S. could do more to assist Ghanaians so that they can be better positioned to take advantage of their preferential access. First, Funkor suggested that the U.S. should simplify the rules of origin so that the average small business in Ghana can better understand what goods are permissible for export through AGOA, and goods are not. He next called for the U.S., through the auspices of USAID, to increase financial support to Ghanaian corporations. He believes strongly that increased aid will help small business in Ghana fight against high interest rates in the U.S. The next area of opportunity that Funkor alluded to was technology transfers. According to Funkor, the GNCCI has received several requests from the private sector for assistance with American made technical equipment. Hence, Funkor argues that a program designed to assist Ghanaians with their use of American equipment would encourage more to buy U.S. made goods. Similarly, David Yawson concluded that the U.S. Congress needs to learn more about the “psychology of the people they are attempting to trade with.” Yawson insists that while the U.S. wants to help “Ghana and other sub-Saharan African nations improve our capacity to conduct business abroad, it has nonetheless, neglected to pay attention to the complexities that inhibit most African nations from pursuing joint business ventures with one another.” Yawson added that he had “hoped that AGOA, on top of opening the Africans’ access to the American market, would have also helped Africans to transverse Anglophone/Francophone barriers to trade.”53

53 Vicky Cooper, when presented with the comments made by David Yawson, vehemently disagreed with his assessment that AGOA, as it stands now, does not help Ghana with its business dealings in the region (West Africa). Cooper insisted that Ghana’s recent turn towards efficiency, which she credits AGOA, will help Ghana do increased business with other West African nations.

93 General Questions This last collection of questions seeks to obtain general information pertaining to the depth and intensity of the current and future trade relationship between the U.S. and Ghana. The issues covered in this section include (1) outlook on the impact of AGOA in Ghana, (2) products most suitable for export through AGOA, and (3) industry development opportunities. In assessing the impact of AGOA in Ghana, J.E.B. Haizel, despite suggesting earlier that the premise of AGOA—the opening of the American market for sub-Saharan African exporters—was misplaced, painted an optimistic picture for the future. He contends that though trade has been relatively low, in some cases, AGOA has contributed to the increase in trade with the U.S., especially in the cocoa and textiles sectors. Haizel argues that in the long run, “AGOA potentially will make Ghanaian products more efficient and of higher quality.” In his concluding remarks, Mr. Haizel commented that “if nothing else, Before AGOA, African nations could only use the European market for exportation, now; we have the potential to compete in the U.S.” Godfried Funkor noted that the GNCCI believes that the benefits of AGOA for Ghana are most likely to occur well into the future, and that Ghanaians are going to have to accept trade offs in their relationship with the U.S., by way of visa regulations, in order to bare witness to these benefits. In terms of present benefits, Funkor asserts that “AGOA is succeeding in helping Ghana get its political and economic houses in order.” Ultimately, Funkor believes that AGOA provides Ghana with its best opportunity to conduct trade with the U.S. However, he mentioned that it was up to “Ghanaians to choose or not to choose to use AGOA—the Americans cannot make the decision for us.” The U.S. Embassy official applauded AGOA for helping businesses in Ghana and in other parts of sub-Saharan Africa adapt to how business is conducted in the larger markets across the globe. Further, the official commented that “once AGOA has helped Ghanaians learn how to successively export their products to the States, they then will be better positioned to export those same products elsewhere.” With regards to the products most suitable for export through AGOA, Abar Sartarr listed gold, cocoa, diamonds, minerals, and traditional handcrafts as the most logical candidates. However, Sartarr noted that Ghanaians, no matter what products they

94 select for export, are going to run into trouble because “basic economic foundations are not in place for Ghana to take full advantage of AGOA.” He suggested that the private sector needed more training before it was ready to become a active player in the export market. David Yawson mentioned fresh vegetables as a potential area that is ripe for exportation though AGOA. He also suggested that Ghana’s budding pineapple industry, with the help of mass production, could possibly help Ghanaian businesses take advantage of AGOA. Yawson summed up his comments by arguing that if the “government and public sector in Ghana does not press private sector enterprises to move faster to develop strong products for export, MNCs, such as Dole and Chiquita, will enviably move in and displace Ghanaian based businesses.” In terms of industry development opportunities, Vicky Cooper expressed that “AGOA can and should help Ghana develop new industries.” According to Mrs. Cooper, “if Ghanaians can reduce their capitol expenditures, and work on structural-power problems, the emergence of new industries in Ghana will come far more quickly.” For Cooper, AGOA is above anything else, a unique business opportunity for African companies. In her opinion, “If Ghanaians get it right, many millionaires in Ghana can be made.” Like Cooper, the U.S. Embassy official also believed that AGOA provides Ghana with the ability to develop new industries for export. The official however noted that new industry development in Ghana is dependent upon the adaptability of Ghanaian workers and the ability of the government to provide a more favorable business environment to attract foreign investors. Dr. Kyeremateng however indicated that there are several indigenous factors that limit Ghana’s ability to develop new industries through the AGOA. In particular, he cited weak supply capacity; poor infrastructure; the lack of incentives for domestic production; poor and/or uncompetitive technology; a lack of short, medium and long- term capital (the high cost of capital in general); weak macro-economic fundamentals; and a lack of negotiating capacity on most trade issues as the primary culprits inhibiting development.

95 In contrast, Godfried Funkor inferred that AGOA itself operates as an impediment for the development of competitive industries in Ghana. He stated that AGOA regulations and supply constraints restrict Ghana’s ability to develop new and competitive industries. Chapter Summary This chapter examined three subjects: (1) Ghana’s position in the world economy, (2) the history of Ghana’s trade relations with the U.S., and (3) the results from a survey that was conducted among Ghanaian and U.S. government trade agencies and business groups. An examination of Ghana’s domestic economy indicated that roughly 60 percent of the Ghanaian workforce is employed in the agriculture, forestry, and fishing sectors. Cocoa, which represents the country’s largest cash crop and most lucrative commodity for foreign exchange, employs more 1.6 million peasant farmers across the country. Other important cash crops include bananas, cashew nuts, cassavas, cereals, pineapples, and tobacco. When Ghana’s export sector was considered, it was found that companies that export more than 70 percent of their products qualify for the FTZ provision that exempts them from paying duties on all imports used as production inputs and on income taxes for a period of ten years. Historically, Ghana’s principle exports to the world market include aluminum, cocoa beans, cocoa paste and cocoa butter, manganese, fish products, gold, petroleum products, pineapples, and processed wood products. After examining Ghana’s leading trade partnerships, it was revealed that the E.U. has long been the leading foreign market for most Ghanaian goods, with the U.K., France, the Netherlands, and Germany representing its top single-country trade partners consecutively. In terms of the impediments to the growth of the Ghanaian economy, research conducted by the EIU, U.S. Department of State, and the World Bank indicated that inefficient document handling, the absence of market research and effective marketing, high transactions costs, high interest rates, dilapidated roads and highways, and the limited network of cold storage facilities make it difficult for Ghanaian manufactures to meet the demands of large-scale international wholesalers and retailers. The shortage of

96 a highly skilled workforce was the last factor reported that adversely affects the quality of most Ghanaian products and limits the scope of sophisticated goods produced in the country. With regards to trade relations between the U.S. and Ghana, research indicated that the trade-partnership has in recent years grown to be increasingly significant to Accra, with the U.S. representing Ghana’s third largest trade partner, behind Japan and the E.U. Table 20 noted that the U.S. trade surplus with Ghana was roughly $130 million in 2003; and as for 2004, U.S. exports to Ghana totaled more than $300 million, making Ghana the fifth largest export market for the U.S. in sub-Saharan Africa. Analysis of Ghanaian exports to the U.S. revealed that trade was heavily concentrated on agricultural, aluminum, forest, energy-related products, and various precious minerals and raw metals. In examining the impediments to the deepening of trade relations between the U.S. and Ghana, a study conducted by the USTR in 2005 revealed weaknesses within nine critical sectors of the Ghanaian economy—business environment, transportation- customs, capital, labor, agriculture, fisheries, wood and wood products, tourism, and other key factors—that impede the expansion of Ghanaian trade with the U.S. through AGOA. With respect to the survey, it was designed to uncover the problems and concerns that Ghanaian and U.S. government officials and private sector representatives have as far as the implementation of AGOA in Ghana is concerned. As was described earlier, these interviews focused on eight categories of questions related to how respondents view the general awareness of AGOA and its procedures; the level of assistance the Ghanaian government provides entrepreneurs who seek to become more familiar with AGOA rules and regulations; and the overall appeal of the Act in Ghana. Based upon the respondent’s answers to these interviews, it was possible to make several observations about the perceived impact of AGOA in Ghana. The first is that despite the fact that the Ghanaians consider trade with the U.S. as vital to their economic interests, both governmental and private industry representatives noted that most trade officials do not feel comfortable with AGOA rules and regulations. The lack of access to educational materials; absence of professionally trained staff with expertise in U.S. customs laws; the infrequency with which government sponsored seminars occur; and the

97 limited capacity of the Ghanaian government to allocate resources for educational projects were the most critical reasons given to explain the problems Ghanaians generally face with their understanding of AGOA. A second observation has to do with how Ghanaians perceive the government’s attempts to assist them in their efforts to conduct trade with the U.S. The respondents indicated that the Ghanaian government primarily relies on seminars and the dissemination of literature to help private industry acquire the information it needs to understand AGOA’s complex export requirements. However, some respondents indicated that the government sponsored seminars were in need of an overhaul, and others suggested that due to limited distribution, the GMTI’s literature initiatives were largely ineffective. A third observation relates to the confidence Ghanaians have that AGOA will eventually expand the trade relationship between the U.S. and Ghana. Overwhelmingly, most respondents reported that they held little if no confidence that AGOA would substantially alter Ghana’s trade position with the U.S. Respondents generally noted that the biggest challenges concerning the implementation of AGOA in Ghana are tied to the diminished capacity on the part of the Ghanaian private sector. In particular, the inability of Ghanaian exporters to take advantage of their market access to the U.S. market; the lack of competitive export industries; poor infrastructure; and the low priority placed on high-volume trading were all cited as reasons for why AGOA is not expected to generate much in terms of increased trade with the U.S. in the near-term. Overall, only two respondents suggested that Ghana could improve its trade relationship with the U.S. through AGOA. A fourth observation pertains to Ghanaian interpretations on the U.S.’s involvement in the implementation of AGOA in Ghana. The majority of respondents indicted that the U.S. could do more to help Ghanaians take advantage of their preferential trade access to the American market. The simplification of the rules of origin, technology transfers, and increased developmental assistance were cited as examples of areas in which the U.S. government, in particular the Congress, could address in order to ensure the quality of AGOA in Ghana.

98 A fifth and final observation indicates that several structural challenges will have to be addressed before discussion can commence on whether AGOA provides an opportunity for Ghana to generate new and competitive industries for export. As might be expected, respondents listed weak supply capacity, poor infrastructure, inferior technology, capital constraints, and the apathetic business environment in Ghana as the key obstacles infringing on Ghanaian creativity and ingenuity in terms of product development. Only one respondent indicated that the design of AGOA, in particular its regulations and supply constraints, adversely affects Ghanaian efforts to become more competitive on the open market. In conclusion, with over half of AGOA’s shelf life having already passed, Ghana has yet to begin to take full advantage of its preferential access to the largest market in the world—the American market. As the answers to the survey indicated, low capacity, poor infrastructure, and the lack of Ghanaian expertise pertaining to U.S. trade laws seem to be the most salient factors contributing to the less than stellar record of AGOA in Ghana. In addition, Ghana’s inexperience with high volume trade; its soft commitment to quality control protocols; and unskilled workforce further undermine the likelihood that Ghana will have substantially expanded and diversified its trade relationship with the U.S. by AGOA’s end in 2015. Clearly, in terms of Ghana’s national economic interests, these impediments to the quality and growth of its export led industries will need to be addressed before it can expect to become a significant player in global trading.

99 CHAPTER THREE NOTES

1. U.S. Department of State, U.S. Lawmaker Calls for an AGOA III at Mauritius Forum, http://usinfo.state.gov/regional/af/trade/a3011701.htm. 2. U.S. Mission to Geneva, WTO Trade Policy Review of Ghana, http://www3.itu.int/MISSIONS/US/press2001/0226tprghana.htm. 3. The World Factbook (Central Intelligence Agency), Ghana, www.odci.gov/cia/publications/factbook/print/gh.html. 4. World Bank, Ghana: International Competitiveness—Opportunities and Challenges Facing Non-Traditional Exports, Report No.22421-GH, 2001, p. iv. 5. Economist Intelligence Unit (EIU), Ghana Country Profile, 2004, pp. 17, 25, and 33. 6. African Development Bank/Organization for Economic Cooperation and Development, Ghana: African Economic Outlook, 2003, p. 166. 7. GIPC, Ghana Investment Profile: Travel and Tourism, www.gipc.org.gh. 8. Ghana Cocoa Board, Cocoa Bean Exports by Destination, www.gipc.org.gh. 9. Ghana Forestry Commission: Timber Industry Development Division, Ghanaian Timber Statistics, www.ghanatimber.org. 10. U.S. Department of State telegram, Ghana: Response to Request for Information for USITC Study on Export Opportunities and Barriers in AGOA-Eligible Countries, message reference No. 08545, prepared by U.S. Embassy (Ghana), 2/17/2005. 11. World Bank, Ghana: International Competitiveness-Opportunities and Challenges Facing Non-Traditional Export, Report No. 22421-GH, 2001, pp.44- 45, 58. 12. Kofi K. Apraku, Massive export drive needed to push economy, Ghanaian Times, 8/9/2003. 13. The U.S. Commercial Service, Ghana Country Commercial Guide 2002, http://www.usatrade.gov/website/ccg.nsf/CCGurl/CCG-GHANA20. 14. The U.S. Commercial Service, Doing Business In Ghana—Country Commercial Guide (CCG), http://www.buyusa.gov/ghana/en/40.html.

100 15. Office of the United States Trade Representative, 2004 National Trade Estimate Report on Foreign Trade Barriers—Ghana, http://www.ustr.gov/assets/Document_Library/Reports_Publications/2004/2004_ National_Trade_Estimate/2004_NTE_Report/asset_upload_file781_4767.pdf. 16. AGOA.info, Country Information-Ghana, http://www.agoa.info/?view=country_info&country=gh. 17. The Office of the U.S. Trade Representative, 2005 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The fifth of Fifteen Annual Reports ( May 2005), p.88. 18. World Investment News, Report on Ghana, Enhancing Trade and Accruing Investment, www.winne.com/ghana4/cr01.html. 19. Kofi K. Apraku, Apraku outlines measures to boost trade, Ghanaian Times, 3/10/2003. 20. U.S. Department of State, AGOA Is Opportunity Ghanaians Are Grasping, Official Says, http://usinfo.state.gov/regional/af/trade/a3032101.htm. 21. Anonymous U.S. Embassy (Ghana) Official, Interview with Keith E. Noble, 6/13/2005. 22. Dr. Kyeremateng, Interview with Keith E. Noble, 6/17/2005. 23. Vicky Cooper, Interview with Keith E. Noble, 6/17/2005. 24. Godfried Funkor, Interview with Keith E. Noble, 6/9/2005 25. J.E.B. Haizel, Interview with Keith E. Noble, 6/11/2005. 26. Abar Sattar, Interview with Keith E. Noble, 6/11/2005. 27. David Yawson, Interview with Keith E. Noble, 6/19/2005. 28. The African Growth and Opportunity Act (AGOA) Professional Development Program, AGOA Handout, 6/10/2003. 29. Ministry of Regional Co-operation and NEPAD, Set up AGOA related projects with part of District Assembly Funds, http://www.planning.gov.gh/acb_news_details.cfm?EmpID=240.

101 CHAPTER FOUR

Conclusions and Recommendations

Here in chapter four, the case study will now transition from a focus on the research portion of this analysis and to a discussion on the broader implications of the work that has been presented. In so doing, chapter four is divided into four distinct sections. Section one will provide a detailed summary of the major points covered in each of the preceding chapters. Section two will outline the implications that this research has for the continuing debate on PTAs. Section three will provide policy proscriptions based on the results of the survey for the implementation of AGOA in Ghana and sub-Saharan Africa on the whole. Finally, section four looks to highlight various ways in which future research might build upon the work reported herein. Overview This research has examined the impact that AGOA has on sub-Saharan Africa’s trade relations with the U.S. over the last six years. In particular, this case study was designed to better assess the problems that Ghanaians have faced in their attempts to implement AGOA in Ghana. In order to obtain this in-depth analysis, interviews were conducted with trade officials in Ghana and representatives of the Ghanaian private sector. As such, the three most common problems cited by survey respondents explaining Ghana’s inability to successfully use AGOA as a means to reach the vast American market included low capacity, poor infrastructure, and the lack of Ghanaian expertise with regards to U.S. trade laws. The research reported herein was divided into four parts. The first reviewed the current academic literature on PTAs. It was found that this literature can be divided into three distinct camps, (1) those who oppose PTAs on the grounds that they undermine the development of the multilateral trading system and global trade liberalization in general, (2) those who believe that PTAs can deliver tangible benefits in the form of increased trade and wealth, and (3) those who oppose trade liberalization schemes of any sort due to the potential negative ramifications that they present for import-sensitive sectors in countries worldwide. However, the review of the literature revealed that scholars in this

102 field have in large part neglected to use sub-Saharan Africa as the central focus of their analysis. In addition to this, it was noted that absent the present research, that no other comprehensive studies of AGOA exist that have attempted to use the case study method for which to study the Act’s implementation in a specific country. Hence, this research project was intended to correct this gap in the literature. The second part of this research examined the origins, structure, and the processes by which AGOA has been implemented throughout sub-Saharan Africa. It was found that the passage of AGOA in the spring of 2000 represented the culmination of a six year effort to promote the greater expansion of U.S.-sub-Saharan African trade relations on the part of the Clinton Administration. It was also revealed that the AGOA has undergone two significant legislative overhauls, culminating in the Trade Act of 2002 (AGOA II) which expanded preferential access for imports from beneficiary sub-Saharan African nations; and the AGOA Acceleration Act of 2004 (AGOA III) which extended preferential access for imports from beneficiary Sub Saharan African countries through September 30, 2015. In terms of U.S. efforts to promote AGOA, the research suggests that the USTR has relied on the U.S.-sub-Saharan Africa Trade and Economic Forum as the primary vehicle for facilitating continuous dialogue between the U.S. and sub- Saharan African nations on issues related to AGOA. However, despite U.S. attempts to give sub-Saharan African nations preferential access to its market, AGOA was not welcomed with open arms by all. Most notably, members of the Congressional Black Caucus, the U.S.-based Africa advocacy organization TransAfrica, and the AFL-CIO trade union federation put up a strong fight to block AGOA’s passage in the House of Representatives. Even after its passage, AGOA’s detractors, the most vocal usually coming form African based NGOs, continue to speak out against what they see as unfair conditions imposed on sub-Saharan African countries by the U.S. in exchange for increased market access. Kevin Watkins, a senior policy advisor with Oxfam, has argued that Africans have paid a heavy price for their access to the U.S. market in terms of the burdens brought on by the conditionalities that comes with AGOA. According to Watkins, AGOA eligibility requirements, such as enforcement of US intellectual property rights and the liberalization of domestic markets for US goods and services, are not designed in

103 the best interests of sub-Saharan Africa and could possibly prove to be damaging to poverty reduction initiatives in Africa. Watkins further stated: In areas like foreign investment, intellectual property rights, services and procurements, where there are very large-scale corporate interests involved in the United States, there's an extremely aggressive liberalization agenda being pushed through AGOA which is going to force developing markets to open up in ways that is clearly not in their best interests. So, this is an unequal bargain. It's a bargain in which developing countries are being told, if you want to export garments to us, you give us access to your banking sector and it's a bargain which is ultimately going to exacerbate poverty, not reduce it.1

The third part of the analysis examined the impact that AGOA has had on U.S.- sub-Saharan African trade relations. It was demonstrated that AGOA has enabled the U.S. to become the largest single-country export market for sub-Saharan Africa. U.S. trade with sub-Saharan Africa increased by fifty percent during the first year of AGOA, and by 2004, two-way trade had also increased as U.S. exports to the region rose by 25 percent and U.S. imports had increased by 40 percent. However, it was also revealed that not everyone has benefited equally from their preferential access to the American market. After six years, U.S. trade with the sub- region continues to represent a fraction of total U.S. exports and imports, and trade through AGOA has remained heavily concentrated on few natural resource commodities, such as petroleum and petroleum related products. U.S. imports from sub-Saharan Africa are so overwhelmingly skewed in favor of the American petroleum industry that according to one 2003 report, “the primary benefit to the US economy as a result of AGOA is that oil from eligible countries is landed at lower cost to refiners.”2 Turning to the interview results, five important conclusions emerged from the discussions the author had with representatives from government and Ghanaian private sector. The first is that most Ghanaian trade officials and private industry entrepreneurs do not feel comfortable with AGOA rules and regulations. Respondents gave several reasons to explain why these problems exist, including lack of access to educational

1 allAfrica.com, PanAfrica: The AGOA Bargain is Unequal – Oxfam, http://allafrica.com/stories/200205210002.html?page=2, 7/14/2006. Oxfam International, founded in 1995, is a confederation of 12 independent, not-for-profit, community-based aid and development organizations who work with local partners in over 100 countries to reduce poverty, suffering, and injustice. Oxfam is also a member of the OneWorld Network, which seeks to promote sustainable development, social justice, and human rights throughout the world. 2 WarmAfrica.com, A Narrow Niche for African Exports, http://www.warmafrica.com/index/geo/1/cat/5/a/a/artid/153, 7/16/2006.

104 materials; the absence of professionally trained staff with expertise in U.S. customs laws; and the limited capacity of the Ghanaian government to allocate resources for AGOA educational initiatives. The second is that the Ghanaian government primarily relies on the seminar and literature drop format to spread awareness of AGOA in Ghana. However, as was indicated, some of the respondents were critical of the governments’ outreach efforts, suggesting that changes in the seminar format are greatly needed. The third and fourth conclusions pertain to the feelings that Ghanaians have that AGOA will ultimately expand their trade relationship with the U.S. and their interpretations on the role the U.S. has played in helping to promote the Act. In general, the respondents reported that due to the limited capacity of Ghanaian private sector, there was little chance that AGOA would substantially impact Ghana’s trade position with the U.S. in the near-term. With regards to American involvement in the promotion of AGOA, the majority of respondents indicated that Washington could do more. Beyond this, the Ghanaian respondents seemed to implicitly suggest that their belief in AGOA was directly tied to the level of support the U.S. is willing to offer Ghanaian exporters in selling their goods on the American market. Put another way, Ghanaians feel that increased American development assistance will better position them to use AGOA to export their goods abroad. The final conclusion revealed that operational constraints, such as weak supply capacity, poor infrastructure, inferior technology, capital constraints, are preventing Ghanaians from developing new and competitive industries for export through AGOA. It was also suggested that AGOA’s regulations and supply constraints could potentially be another factor that impedes the development and growth of Ghanaian export sectors. Clearly, as the answers to the survey would seem to suggest, Ghanaian’s are going to have to address the limited financial and operational capacities of their public and private sectors, and secure greater expertise on U.S. trade laws and practices if they expect to take advantage of their special access to the U.S. market before 2015. Theoretical Implications The foregoing research has four implications for the scholarly debate over PTAs. The first tells us how preferential trade can be economically beneficial to developing nations. The second pertains to the ability of PTAs to secure and maintain political and

105 economic reforms. Finally, this research tells us something about how dependency theory applies to the current trade relations between the U.S. and sub-Saharan Africa. Beginning with the economic benefits of preferential trade for developing countries, the work herein clearly supports the main tenants of Michael Lusztigs’ arguments, namely that trade liberalization increases wealth; does not always distribute wealth equally; and can lead to greater job creation. According to the latest USTR report on AGOA, since its inception in 2000, AGOA has helped to increase two-way trade with sub-Saharan Africa by 115 percent. The same report also indicted that in 2005, U.S. exports to sub-Saharan Africa rose 22 percent to $10.3 billion, due to increased sales of oil field equipment and parts, aircraft, vehicles, wheat, and electrical machinery (including telecommunications equipment)—which to a large extent represents the same set of products that drove U.S. exports in 2004. It was also reported that U.S. imports rose 40 percent from 2004 to $50.3 billion, due in part to a significant increase in imports of crude oil (mainly driven by rising demand and high oil prices) as well as smaller increases in imports of platinum, diamonds, and cocoa.3 Hence, the research demonstrates that Lusztigs’ central thesis is correct, open trade can lead to greater wealth. In terms of total trade, AGOA has helped to facilitate the deepening of economic ties between the U.S. and sub-Saharan Africa. Every indicator seems to suggest that the volume of two-way trade will continue to grow at a steady pace for several years to come. Analysis of AGOA trade patterns however also confirmed another one of Lustigs’ observations, specifically; it was determined that U.S. trade with the sub-region is heavily concentrated, and that wealth generated through AGOA has not been distributed equally. If Lustig’s claim that the overall objective of freer-trade is not to maximize justice, but rather, it is to maximize wealth, is to be taken as gospel, then AGOA as whole has failed to achieve this objective. Trade relations between the between the U.S. and sub-Saharan Africa continue to remain highly concentrated among a small number of countries. However, the problem

3 The Office of the U.S. Trade Representative, 2006 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Sixth of Eight Annual Reports ( May 2006), pp.1-19.

106 here is not that AGOA has forced small business in Africa out of the marketplace; rather, the problems associated with trade concentration have more to do with the limited number of competitive export sectors in most sub-Saharan African countries. As other developing nations have tried to do after securing preferential terms of trade, the bulk of sub-Saharan nations have primarily used AGOA as a means to expand their textile and apparel sectors. The main setback with this approach is that is that in recent years, in particular, since 2005 when China joined the WTO, increased global competition in these sectors has resulted in declining imports. Thus, as the trade figures demonstrate, the few nations that are able to maintain a diverse array of products for export are the same ones that year in and year out also command the bulk of two-way trade with the U.S. The lack of diverse competitive industries throughout the region will continue to negate the maximization of trade profits for all parties to AGOA until comprehensive attempts are made in each country to address this problem. In terms of job creation, an examination of the data presented would seem to prove another one of Lustigs’ points. In a 2003 U.S. Department of State report, Under Secretary Alan Larson noted that AGOA was directly responsible for creating tens of thousands of jobs across the continent. According to Secretary Larson, seven countries that keep track of AGOA job creation—Kenya, Lesotho, Malawi, Mauritius, Namibia, Swaziland, and South Africa—credited AGOA for providing employment to more than 150,000 workers in these countries since its original inception.4 Significant job growth was also reported in Cameroon, Botswana, and Senegal. Carol Pineau, a journalist with more than ten years of experience reporting on Africa, perhaps put it best when she stated that “thanks in large part to the historic African Growth and Opportunity Act (AGOA), Africa is now open for business.” Pineau believes that AGOA should be credited for actively aiding Africa's economic development. In her opinion, “AGOA is all about job creation—people feeling good about themselves, being able to take care of their own family without aid, being in a position of power over their own lives, and being in charge of their own destiny.”5

4 U.S. Department of State, AGOA III: The United States Africa Partnership Act of 2003, http://www.state.gov/e/rls/rm/2004/30777.htm, 7/18/2006. 5 U.S. Department of State, Journalist Carol Pineau Shows Africa Is "Open for Business", http://usinfo.state.gov/usinfo/Archive/2005/Jul/17-949155.html?chanlid=washfile, 7/18/2006. For more

107 Similar to the distribution of wealth, job creation through AGOA has unquestionably been concentrated in a select few countries. This is however not unexpected. Job creation through AGOA seems to run parallel with the creation of wealth. Many of the countries, such as South Africa and Cameroon, that have reordered significant increases in trade, have also reported increases in employment. It is important to remember that PTAs such as AGOA only promise to provide an opportunity for the creation of new jobs and expanded wealth—they never offer any guarantees. The potential for new job growth in Africa will in the future depend heavily on the efforts of African governments and private industry to develop new industries that can be competitive on the global market. Education and technical training for the general workforce will also play a critical role in determining whether more jobs will be created across a broader scope of sub-Saharan African countries. It should also be noted that the research does not substantiate the claims made by Washington Post columnist James K. Glassman, and others, that argue free trade does not create jobs; it merely shifts jobs from one sector to another. The vast majority of jobs that have been created through AGOA were either non-existent before the Act’s passage or came about as the result of the expansion of certain export businesses due in part to the revenue generated by sales to the U.S. and other international markets. A second theoretical implication of this research pertains to political and economic reforms. Analysis of the research does not seem to support Bhagwatis’ and Kruegers’ assertion that PTAs do not lock reforms in for participating nations. The mere fact that 37 out of a possible 48 sub-Saharan African nations are currently eligible to receive AGOA benefits suggests that more than a majority of the nations on the continent have demonstrated a continuing willingness to maintain the political and economic reforms necessary to sustain their eligibility. The behind-the-door measures implemented in most PTAs that affect trade and investment flows, as mentioned by Jeffery Schott, were also found to be present in AGOA criteria measures. These measures, as was mentioned in the research, which are

information on how AGOA has enhanced job creation in sub-Saharan Africa, check out Ms. Pineau’s 2005 documentary film, Africa: Open for Business, which offers ten portraits of African entrepreneurs as they describe how they overcame tremendous challenges and succeeded in launching their own businesses in difficult business climates.

108 used in AGOA to determine country eligibility, were originally designed to help attract trade and investment to the sub-Saharan African region. Ghana’s recent approval for $547 million in Millennium Challenge Account (MCA) money represents a clear example of how the commitment to statutory reform platforms represented in most PTAs can overtime, deliver tangible benefits for developing nations. On July 12, 2006, Ghana was approved to receive anti poverty money for a five- year period. The Millennium Challenge Corporation (MCC) reports that the money is expected to benefit more than one million Ghanaian by improving agriculture, transportation and community development initiatives. According to Ambassador John Danilovich, the Chief Executive Officer of the MCC, Ghana’s approval for funds resulted from its adherence to “U.S. conditionalities of ruling justly, investing in people and encouraging economic freedom.”6 As logic would dictate, FDI in sub-Saharan Africa, as is the case in all regions around the world, consistently flows to those markets that provide the most competitive and investor-friendly environments. It is widely known that foreign businesses and investors search for dependable and open regulatory regimes, adequate infrastructure, productive human capital, and political and economic stability when making investment decisions. Hence, as the research indicates, the want on the part of sub-Saharan African countries to garner increased foreign investment and aid is a key factor in understanding why PTAs such as AGOA help developing countries lock in the necessary reforms to secure such funding. Finally, this research says something about how dependency theory applies to discussions on PTAs. According to Theotonio Dos Santos, “dependency is a historical condition that shapes the structure of the world economy such that it favors some countries to the detriment of others and limits the development possibilities of the

6 allAfrica.com, Ghana: Ghana Gets Controversial Millennium Challenge Cash, http://allafrica.com/stories/200607170724.html, 7/19/2006. The MCA is a bilateral development fund that was first announced by President Bush in 2002 and created in January 2004. The MCA represents the president’s commitment to permanently increase United States foreign aid funding by $5 billion by 2005. The money allotted by the MCA is regulated by the MCC. The MCC determines eligibility on a competitive basis through a set of 16 indicators designed to measure a country’s effectiveness at ruling justly, investing in people, and fostering private enterprise and entrepreneurship. As of July 2006, half of the remaining 22 MCA eligible countries—Benin, Burkina Faso, Cape Verde, The Gambia, Lesotho, Madagascar, Mali, Mozambique, Namibia, Senegal, and Tanzania—are also AGOA eligible.

109 subordinates’ economics.”7 As such, there are three main features of this definition which most dependency theorists share. First, dependency characterizes the international system as comprised of two sets of states, usually described as dominant-dependent, center-periphery, or hub-spoke. The dominant states are primarily made up of advanced Western industrial nations. Dependent states on the other hand, such as those in sub- Saharan Africa, commonly have lower per capita GNP, and usually rely heavily on few resource commodities for foreign exchange earnings. Second, this definition assumes that external forces are the most relevant factors that influence the economic activities within dependent states. Examples of external forces include multinational corporations, international commodity markets, foreign assistance, communications, and any other means by which the advanced industrialized countries can represent their economic interests abroad. Lastly, this definition of dependency suggests that interactions between dominant and dependent states are dynamic because the interactions between the two sets of states tend to only reinforce unequal patterns. Moreover, dependency is viewed as a historical phenomenon, which is rooted in the internationalization of capitalism. After careful consideration of the research, it appears that some elements of dependency theory may apply to U.S.-sub-Saharan Africa trade relations. As was first pointed out by Benjamas Chinapandhu (Free Trade and Fair Trade: 2002) in her discussion on dependency in U.S.-Thai trade relations, a new type dependency seems to have emerged, one in which the U.S. as the dominant state employs the use of complex legal rules and procedures to control the terms of trade with dependent states in Africa. One of the respondents expressed deep concern that complex AGOA regulations, such as the rules of origin requirements and supply constraints restrict Ghana’s potential to develop new and competitive industries. Similarly, members of the Consumer Unity and Trust Society-Africa (CUTS- ARC), during a two-day regional workshop held in 2002— The Interface Between Trade and Regional Partnership Agreements—Cotonou, AGOA, WTO and NEPAD—oncluded that AGOA’s rules of origin constrain African development; the group also suggested that AGOA should not be seen as a true

7 Dos Santos, Theotonio, The Structure of Dependence, in K.T. Fann and Donald C. Hodges, eds., Readings in U.S. Imperialism, Porter Sargent, 1971, p. 226.

110 partnership on account that little African input was taken into consideration during its preparation.8 The fact that some of the survey respondents expressed discontent with the complexity of AGOA rules and regulations should not by itself justify the labeling of U.S. trade relations with sub-Saharan Africa as a classic example of dependency. Despite the high concentration of trade with a small number of African countries, the U.S. trade deficit with the region has risen sharply in each of the last four years. According to the Department of Commerce’s 2006 U.S.-African Trade Profile, The U.S. merchandise trade deficit with sub-Saharan Africa widen in 2005 to $40.0 billion, up from $27.4 billion the previous year.9 As noted above, dependency theorists depict interactions between dominant and dependent states as unequal. However, as the research has demonstrated, U.S. trade with the region through AGOA has created more wealth for the African states than it has for Washington. Hence, while on the surface U.S.-African trade relations might seem to reinforce some aspects of dependency, the data on the other hand suggests otherwise. Policy Recommendations The policy recommendations that can be derived from this research come in two forms. The first has to do with how AGOA can be revised so that it helps Africans improve upon their endemic capacity constraints. The second relates to Ghanaian domestic opportunities for export promotion and reform that will help Ghana better position itself so that it can expand its trade relations with the U.S. According to a recent Bread for the World report, “many economic development goals can be achieved within the existing framework of AGOA by increasing

8 Bridges Weekly Trade News Digest, Harare Workshop Discusses NEPAD, AGOA, and Other Trade Arrangements, http://www.ictsd.org/weekly/02-11-07/story6.htm, 7/19/2006. CUTS-ARC functions as a resource center for African-based NGOs, consumer organizations, and for CUTS sponsored research and advocacy programs. CUTS-ARC also assists African countries with capacity building activities on international trade, investment and competition policy issues, including environment, consumer protection and regulatory reforms. 9 U.S. Department of Commerce, U.S.-African Trade Profile, March 2006, p.3. Nigeria, Angola, Gabon, and South Africa accounted for roughly 87 percent of the U.S. trade deficit with Sub-Saharan Africa in 2005.

111 appropriations targeted as strengthening the capacity building provisions of the Act.”10 Understanding that capacity building is one of the essential areas in need of improvement under AGOA, the author contends that the preferential access afforded to sub-Saharan African countries through AGOA is meaningless if African traders are unable to take advantage of their special access. USAID is perhaps the best suited American agency to address this problem. As such, USAID could begin to target certain areas within sub- Saharan African nations, such as agricultural, infrastructure, and transportation and communications sectors, that would benefit the most from capacity development assistance. Targeted capacity building assistance could provide much needed technical assistance to Africa’s agricultural industries. In particular, this type of aid would benefit research programs, institutions servicing small private farmers, food processing plants, and transportation networks. In terms of infrastructure development, increased assistance could lead to the procurement of more modern packaging plants, improve domestic investment in storage facilities, increase value-added processing, enhance the quality of export products, and improve phyto-sanitary practices. Lastly, improvements in regional transportation and communication networks could potentially reduce high transaction and marketing costs. Another USAID recommendation would be for Congress to increase the funds it allots to the USAID sponsored Trade Capacity Building Project (TCBP). TCBP, which is sponsored by USAID's Bureau of Economic Growth, Agriculture and Trade (EGAT), helps developing countries assess their trade constraints and prioritize their trade-related technical assistance needs. In 2003, the U.S. allotted more than $130 million in trade capacity building funding for sub-Saharan Africa.11 While recognizing that USAID funds are not limited and are always subject to cutbacks, one might nonetheless argue that increased funding for TCBP, say $200-250 million per year, would better position the agency to address the region’s most critical trade-related capacity constraints—these

10 Bread for the World, AGOA 2003 and African Agriculture, http://www.gov.mu/portal/sites/ncb/agoa/agricul.htm, 7/19/2006. 11 U.S. House of Representatives: Committee on International Relations, Testimony of Emmy B. Simmons, Assistant Administrator for Economic Growth Agriculture and Trade U.S. Agency for International Development: before the Committee on International Relations—Subcommittee on Africa (May 11, 2004), http://wwwc.house.gov/international_relations/108/sim051104.htm, 7/19/2006.

112 include, finance, transportation, information and communications technology, human resources development, quality control, and sanitary and phyto-sanitary constraints. Exploring market niche opportunities in the U.S. is another area of capacity development that should be addressed through AGOA. An argument can be made that the U.S. should provide technical assistance for eligible sub-Saharan African countries to identify and access emerging niche markets, especially in the agricultural and apparels sectors. Responses to the interview questions indicated that Africans need more assistance in understanding U.S. consumer preferences and demands for high-quality and value-added goods. A second set of recommendations pertains to Ghanaian domestic opportunities for export promotion and reform. There are several sectors in the Ghanaian economy that if exploited, would contribute significantly to export led growth. To begin with, Ghana’s abundant agricultural resources and arable land enhance its potential to be globally competitive in the export of certain fresh and processed fruits (pineapples, papayas, mangoes, and other off-season fruits).12 In addition, it is suggested that Ghana should look for ways to expand its share of the growing world market for cocoa butter and processed cocoa products. Ghana has as of yet to fully develop its apparel industry. Currently, Ghana exports small quantities of Afrocentric apparel to the U.S. and elsewhere. However, Ghana’s exports do not fulfill the rising demands of U.S. consumers, in particular African-Americans, for Kente-inspired clothing.13 Ghana also has the potential to expand production and exports to the U.S. market of fine and custom jewelry. Given the large number of traditional artisans producing Akan-styled jewelry, it is believed that potential lucrative jewelry exports include handcrafted and machine-made fine jewelry, costume jewelry and jewelry accessories and tools.14 The Ghanaian government should also consider promoting more exports of processed wood products for markets in North America and Europe. According to one study, Ghana could potentially become competitive in exporting traditional handcrafts,

12 GIPC, Ghana Investment Profile: Cash Crops and Food Production and Processing, www.gipc.org.gh, 7/19/2006. 13 GIPC, Ghana Investment Profile: Cotton Textiles, www.gipc.org.gh, 7/19/2006. 14 GIPC, Ghana Investment Profile: Fine and Custom Jewelry, www.gipc.org.gh, 7/19/2006. Akan-styled jewelry refers to traditional jewelry made by the Akan peoples of Western Africa.

113 moldings and machined wood, cabinet frames and panels, as well as paper and paperboards.15 Ghana also has room to expand its tourism sector, which at present, represents the country’s third-leading source of foreign exchange revenue. The expansion of tourism- related services and marketing campaigns targeted at attracting American and European tourists, as well as Ghanaian expatriates living abroad, would positively impact that number of tourists that visit the country each year. Finally, it is recommended that the Ghanaian government should take steps to reassess its AGOA outreach efforts, which currently, are moving along at a slow, but steady pace. The infrequency associated with the GMTI’s AGOA informational and training seminars, as reported in the survey, represent an important inhibitor to the spread of AGOA awareness in Ghana. Surely, an attempt on the part of the GMTI to construct a timelier AGOA outreach program would cut down on the uneasiness that most Ghanaians have, specifically agricultural and textiles and apparel exporters, with AGOA rules and regulations. In the absence of regular scheduled training and information sharing workshops, it highly unlikely that the GMTI will be able to adequately update Ghanaian exporters on any changes or modifications to the Act. Future Research While the information presented in this case study provides relevant and new data pertaining to U.S.-sub-Saharan African trade relations, and in particular, the U.S.- Ghanaian trade relationship, much work remains to be done. Additional research on this topic may answer three additional questions. First, has sub-Saharan Africa’s preferential access to the American market lead to trade diversion with other developing regions? Second, how has U.S. PTAs and FTAs with other developing regions affected the value of Africa’s trade preferences through AGOA? And lastly, future researchers might want analyze how Ghana’s commitment to AGOA eligibility requirements has impacted the quality of its trade relations with its other major trading partners? Beginning with trade diversion in other developing regions, it seems that the main point of analysis will be to determine whether the magnitude, if in fact diversion has occurred, is large enough in scale to pose a serious threat to other less-advantaged

15 GIPC, Ghana Investment Profile: Furniture and Wood Processing, www.gipc.or.gh, 7/19/2006.

114 nations. According to a report from Nathan Associates, Inc., U.S. imports from developing countries in 2001 amounted to roughly $570 billion, with shipments from sub-Saharan African countries accounted for only about $20 billion.16 Moreover, U.S. imports from the region account for only 3.5 percent of total shipments from developing countries. Thus, any diversion in trade that is created through AGOA would appear to be insignificant and would not pose a significant threat to other developing countries. As far as how additional U.S. sponsored trade agreements have affected the value of Africa’s special trade preferences, it would seem that AGOA eligible countries will in the future have to compete on a non-preferential basis with countries in other regions that also enjoy preferential access to the American market. William Cline, of The Center For Global Development (CGD), found that NAFTA’s passage negatively impacted the value of the trade preferences afforded to countries that were a party to the Caribbean Basin Initiative, causing what he describes as “significant trade and investment diversion toward Mexico in its textile s and apparel sectors.”17 As such, comprehensive research on this subject would help to explain the specific threats, if any, that African nations face from pre-existing U.S. trade agreements with other developing regions; and could potentially predict possible threats brought on by future negotiated PTAs as well. Lastly, much has been written about the benefits that developing nations reap on account of their participation in PTAs with larger industrialized countries of the West. In particular, as one of the respondents suggested, the eligibility requirements proscribed in these type of agreements are designed to help developing countries improve their ability to conduct trade more competitively on a global scale. Examples such as the establishment of proper visa requirements; heightened quality control awareness; improved sanitary and phyto-sanitary standards; the elimination of most barriers to trade; and the development of market based economies were cited as potential benefits. As such, a research project designed to study the record of Africa’s trade relations since

16 Nathan Associates, Inc., U.S. Trade With Developing Countries, http://www.nathaninc.com/NATHAN/files/ccPageContentDOCFILENAME000565705546ustradetrends.pd f, 7/19/2006. Nathan Associates is a private American company that assists the U.S. government in economic planning, evaluation and cost-benefit analysis of economic policies and investment projects, and other related issue areas. 17 Cline, William R., Trading Up: Strengthening AGOA’s Development Potential, CGD Brief, June 2003, Volume 2, issue 3, p.6.

115 AGOA has come about, with other industrialized nations, would ultimately shed more light on this issue area. In conclusion, this case study has advanced our understanding of the complex dynamics that underline sub-Saharan Africa’s trade relations with the U.S., and specifically, the problems associated with Ghanaian attempts to implement AGOA in Ghana. However, as this section has indicated, more research is required on this understudied subject. Since both the U.S. and the majority of African nations have clearly demonstrated that they will continue to look to AGOA as the primary vehicle with which to conduct trade with one another, it is important that additional work in the future look to build upon the research advanced herein.

116 CHAPTER FOUR NOTES

1. allAfrica.com, PanAfrica: The AGOA Bargain is Unequal – Oxfam, http://allafrica.com/stories/200205210002.html?page=2. 2. WarmAfrica.com, A Narrow Niche for African Exports, http://www.warmafrica.com/index/geo/1/cat/5/a/a/artid/153. 3. The Office of the U.S. Trade Representative, 2006 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth & Opportunity Act, The Sixth of Eight Annual Reports ( May 2006), pp.1-19. 4. U.S. Department of State, AGOA III: The United States Africa Partnership Act of 2003, http://www.state.gov/e/rls/rm/2004/30777.htm 5. U.S. Department of State, Journalist Carol Pineau Shows Africa Is "Open for Business", http://usinfo.state.gov/usinfo/Archive/2005/Jul/17- 949155.html?chanlid=washfile. 6. allAfrica.com, Ghana: Ghana Gets Controversial Millennium Challenge Cash, http://allafrica.com/stories/200607170724.html. 7. Dos Santos, Theotonio, The Structure of Dependence, in K.T. Fann and Donald C. Hodges, eds., Readings in U.S. Imperialism, Porter Sargent, 1971, p. 226. 8. Bridges Weekly, Harare Workshop Discusses NEPAD, AGOA, and Other Trade Arrangements, http://www.ictsd.org/weekly/02-11-07/story6.htm. 9. U.S. Department of Commerce, U.S.-African Trade Profile, March 2006, p.3. 10. Bread for the World, AGOA 2003 and African Agriculture, http://www.gov.mu/portal/sites/ncb/agoa/agricul.htm. 11. U.S. House of Representatives: Committee on International Relations, Testimony of Emmy B. Simmons, Assistant Administrator for Economic Growth Agriculture and Trade U.S. Agency for International Development: before the Committee on International Relations—Subcommittee on Africa (May 11, 2004), http://wwwc.house.gov/international_relations/108/sim051104.htm. 12. GIPC, Ghana Investment Profile: Cash Crops and Food Production and Processing, www.gipc.org.gh.

117 13. GIPC, Ghana Investment Profile: Cotton Textiles, www.gipc.org.gh. 14. GIPC, Ghana Investment Profile: Fine and Custom Jewelry, www.gipc.org.gh. 15. GIPC, Ghana Investment Profile: Furniture and Wood Processing, www.gipc.or.gh. 16. Nathan Associates, Inc., U.S. Trade With Developing Countries, http://www.nathaninc.com/NATHAN/files/ccPageContentDOCFILENAME0005 65705546ustradetrends.pdf. 17. Cline, William R., Trading Up: Strengthening AGOA’s Development Potential, CGD Brief, June 2003, Volume 2, issue 3, p.6.

118 APPENDIX A.

(Ghana) AGOA Survey

Procedural Questions

1. Do businessmen/women or trade officials in your country feel comfortable with AGOA procedures?

2. Do businessmen/women or trade officials in your country feel that they have been given adequate opportunity to provide United States Trade Representative (USTR) officials with input regarding AGOA implementation in Ghana?

3. Has the U.S. provided adequate information explaining AGOA details and procedures?

4. How aware is the Ghanaian business community of AGOA?

5. How beneficial has the United States Agency for International Development (USAID) and the U.S. Embassy’s (Ghana) outreach efforts been in increasing the overall awareness of AGOA in Ghana?

6. How have Ghanaian officials approached the U.S.-sub-Saharan Africa Trade and Economic Cooperation Forum?

Knowledge Questions

1. Does the Ghanaian government have a sufficient staff of trained specialists who understand AGOA procedures and U.S. customs laws?

2. Is the Ghanaian government forced to rely on experts from the U.S. to handle AGOA related trade and implementation issues?

3. Does the Ghanaian government place a priority on the training of scholars and professionalism the area of American trade policy?

4. Do Ghanaian corporations employ staffs of trained specialists who understand American trade policy?

5. Outside of the U.S. Embassy and USAID, are there any other organizations that provide assistance in understanding American trade policy?

119 6. Does the Ghanaian government cooperate with other sub-Saharan African nations in the effort to gain assistance with the understanding of American trade policy?

Assistance Questions

1. Does the Ghanaian government assist Ghanaian companies in the understanding of AGOA regulations?

2. Does the Ghanaian government conduct seminars and other training sessions to inform Ghanaian corporations of AGOA regulations?

3. Doe the Ghanaian government make available written material, such as booklets, that explains AGOA regulations?

4. Does the Ghanaian government assist Ghanaian corporations in their search for U.S. legal assistance when problems related to AGOA arise?

A. If so, who in the Ghanaian government provides this assistance?

B. Do Ghanaian corporations typically agree to work with U.S. attorneys recommended by the Ghanaian government?

Burden Question

1. How much does the Ghanaian government spend in legal representation related to

AGOA?

Cooperation Questions

1. What are the Ghanaian procedures for providing adequate data to USTR officials regarding Ghana’s eligibility status under AGOA?

2. Do Ghanaian corporations supply USTR officials with adequate data regarding their trade procedures?

Appeal Question

1. Does the Ghanaian government believe that AGOA will substantially change its trade relationship with the U.S.?

Conformity Questions

1. What role has the Ghanaian government played in the overall implementation of AGOA in sub-Saharan Africa?

120 2. How would the Ghanaian government describe the effectiveness of the implementation of AGOA in Ghana thus far?

3. Does the Ghanaian government feel that the U.S. has lived up to its end of the bargain as AGOA is concerned?

4. What procedures can the Ghanaian government develop to increase the effectiveness of AGOA in Ghana?

5. Does the Ghanaian government feel that AGOA has benefited some sub-Saharan African nations more than others?

A. If so, is the on account of AGOA rules and procedures, or just a reflection of these nations willingness to take advantage of AGOA’s opportunities?

6. Does the Ghanaian government cooperate with other sub-Saharan African nations in an attempt to develop common strategies with the U.S.?

General Questions

1. How would the Ghanaian government describe the nature of its trade relationship with the U.S.?

2. What are the leading Ghanaian products of export to the U.S.?

3. Does AGOA provide Ghana with the opportunity to develop industries that currently do not exist within the nation?

4. Will Ghana use AGOA as a spring board for a possible free trade agreement with the U.S.?

5. Has AGOA helped Ghana in anyway increase its trade relationship with any of the other sub-Saharan African nations?

6. What percentage of Ghanaian exports/imports is covered under AGOA?

7. What effect has AGOA II and III had on the trade relationship between the U.S. and Ghana?

121 APPENDIX B.

Ghana: Prime & Focused Investment Destination For AGOA (African Growth and Opportunity Act)

Ghana: AGOA Merits Product Coverage Under AGOA — Multi-party Democracy Under the Generalized System of — Free Market Economy Preferences (GSP) the US grants Least — Stable Macro-economic Developed Countries preferential tariff Environment concession for approximately 4,600 — Free convertible currency (cedi) trade items. to all major currencies — Respect of Human Rights With AGOA, over 1,800 items are — Rule of Law added to the GSP list of products and — Freedom of Expression and Free also extends duty-free treatment up to 8 Media years ending on September 30, 2008. — Free Zone Enclaves — Gateway Air, Sea and Land Therefore under AGOA, Ghanaian Transportation Hub of West exporters can export duty-free and Africa [ ECOWAS – 250M quota-free to the US a wide range of Market] items such as: — Very Hospitable Climate — Rich and Diverse Cultural Fish & Fish Products Heritage — Smoked Fish, Canned Tuna, Frozen — Hospitable People Tuna, Shark Fins, and Frozen — Land of a Thousand Festivals Shrimps/Prawns/Lobsters — The Tropic of Hospitality— Ghana Animals (Live) — In a Word! — Chicken weighing more than 185gms and not more than 200gms “AKWAABA – Welcome” — Ducks, geese, turkeys and guinea fowls not weighing more than 185gms each

Seafood — Fillets of herrings, dried, salted or in brine but not smoked fillets of mackerel, dried, salted or in brine — Oyster, prepared or preserved but not smoked

Vegetable — Chilies, Onions, and Ginger

122 Vegetable Fiber Products Tobacco — Luggage — Cigarettes containing tobacco but not — Handbag clove, paper-wrapped — Flat goods whether or not lined of rattan or of palm leaf Wood and Wooden Products — Sawn wood—furniture Fruits and Fruit Juices — Veneers and Plywood — Pineapple — Pappaw Textiles and Garments — Mangoes — Garments Shirts — Oranges — Woven fabrics of textile materials (Handmade, handloom, folklore) Fruit Preparations — Kente, Adinkra, Kente Stole, Afro- — Grapefruit Centrics — Oranges pulp — Lime Aluminum Products — Pineapples — Aluminum Sheets, Circles Coils, Alloys, unwrought Stranded Wire & Beverages Cables — Chocolate milk drink, — Household Utensils — Non-alcoholic milk-based drinks — Orange juice fortified with beverages Alloy Steel or minerals, prepared from — Alloy Silicon electrical steel concentrates Traditional Musical Instruments and Honey Drums — Natural Honey — Assorted Handicrafts — Wood Carvings Flours and Meals of Soybeans — Basket works — Wheat flour (Grains, seeds, Nuts) — Wooden Furniture and parts, Jewelry — Cotton seeds Gold & Diamonds etc. — Sheanut — Shea Nuts and Shea Butter Palm oil, — Peanut (Groundnuts) not roasted or Palmsoup, Palm nut, Robusta Coffee cooked — Yams (Processed)/Starch (Cassava, Yam) — Cocoa Beans Chocolate and Other preparations of Cocoa — Processed Cocoa — Cocoa Cake — Cocoa Paste — Cocoa Liquor — Cocoa Butter

Medicinal plants & seeds, oil seeds e.g., cotton seeds & sunflower seeds and many more items.

123 Specific Requirements For Export Benefits Under AGOA Under AGOA From Ghana To The — Duty-free and quota free access to US US Market market An export item must: — Opportunity to attract US technology — Opportunity to attract US investment — Be a product or a manufacture of partners Ghana. — Opportunity to improve efficiency — Meet value-added requirement of and capacity to export to other 35% in the case of non- countries. textiles/garments products. — Be exported (shipped) directly from For further information contact: Ghana into the US. Ghana AGOA Secretariat — Be accompanied by appropriate Ministry of Trade & Industry export documents for AGOA PO BOX M 47 benefits. ACCRA—Ghana

Trade Benefits For Textiles and Room: 109 Apparel Phones (021) 686519 686527 686570 AGOA extends duty-free and quota-free Telefax: (021) 664776 benefits to imports of a number of E-mail: [email protected] apparel items and textile products used www.agoa.gov/www.ustr.gov to make those goods, produced in eligible sub-Saharan African countries. Ghana has adopted effective visa system and therefore is designated as eligible for apparel/textile benefits.

Ghana Free Zones Ghana Free Zone Board regulations allow for the following:

— Duty and tariff free importation of manufacturing machinery and inputs/raw materials for production in Free Zone enclaves. — Export of 70% manufactured products duty and tariff free from the Ghana Free Zone enclaves to the US under AGOA and other world markets.

124 APPENDIX C.

New Export Opportunities Under The African Growth And Opportunity Act (AGOA)

Building The US-Ghana Partnership Hand –in-Han In the 21st Century (2001 – 2008)

What Is AGOA? Therefore under AGOA Ghanaian The African Growth and Opportunity exporters can export duty-free and Act, popularly called AGOA is a law quota-free to the US a wide range of passed by the US Congress in May 2000, items such as: that allows duty free and quota free access to the US market to products Fish & Fish Products from Sub-Saharan Africa. — Smoked Fish — Canned Tuna AGOA is designed to help African — Frozen Tuna countries to develop through trade with — Shark Fins the US. — Frozen Shrimps/Prawns/Lobsters

Ghana is among the 35 Sub-Saharan Animals (Live) African countries selected to benefit — Chickens weighing more than from AGOA.. This means that the US 185gms but not more than 200gms market is now open to Ghanaian — Ducks, geese, turkeys and guineas products. not weighing more than 185gms each AGOA therefore presents a great opportunity for Ghana to increase her Seafood exports to US and also creates job — Fillets of herrings, dried, salted or in opportunities for Ghanaians. brine but not smoked fillets of mackerel, dried, salted or in brine What Is The Product Coverage And — Oyster, prepared or preserved but not Time Frame Under AGOA? smoked Under a scheme called the Generalized System of Preferences (GSP) the US Vegetable grants Least Developed Countries — Chilies, Onions, and Ginger preferential tariff concession for approximately 4,600 trade items.

With AGOA, over 1,800 items are added to the GSP list of products and also extends duty-free and quota-free treatment up to 8 years, ending on September 30, 2008.

125 Vegetable Fiber Products — Woven fabrics of textile materials — Luggage (Handmade, handloom, folklore) — Handbag — Kente, Adinkra, Kente Stole, Afro- — Flat goods whether or not lined of Centrics rattan or of palm leaf

Fruits and Fruit Juices — Pineapple Aluminum Products — Pappaw — Aluminum Sheets, Circles Coils, — Mangoes Alloys, unwrought Stranded Wire & — Oranges Cables — Household Utensils Fruit Preparations — Grapefruit Iron or Steel — Oranges pulp — Alloy Steel — Lime — Alloy Silicon electrical steel — Pineapples Traditional Musical Instruments and Beverages Drums — Chocolate milk drink, — Non-alcoholic milk-based drinks Assorted Handicrafts — Orange juice fortified with beverages — Wood Carvings or minerals, prepared from — Basket works concentrates — Wooden Furniture and parts, Jewelry Gold & Diamonds etc. Honey — Shea Nuts and Shea Butter Palm oil, — Natural Honey Palmsoup, Palm nut, Robusta Coffee — Yams (Processed)/Starch (Cassava, Flours and Meals of Soybeans Yam) — Wheat flour (Grains, seeds, Nuts) — Cocoa Beans Chocolate and Other — Cotton seeds preparations of Cocoa — Sheanut — Processed Cocoa — Peanut (Groundnuts) not roasted or — Cocoa Cake cooked — Cocoa Paste Tobacco — Cocoa Liquor — Cigarettes containing tobacco but not — Cocoa Butter clove, paper-wrapped Medicinal plants & seeds, oil seeds e.g., Wood and Wooden Products cotton seeds & sunflower seeds and — Sawn wood—furniture many more items. — Veneers and Plywood What Specific Requirements Must Be Textiles and Garments Met To Export An Item Under — Garments Shirts AGOA?

126 An export item must: apparel items, and textile products used to make those goods, produced in — Be a product or a manufacture of eligible sub-Saharan African countries. Ghana. Ghana has adopted effective visa system — Meet value-added requirement of and therefore is designated as eligible for 35% in the case of non- apparel/textile benefits. textiles/garments products. — Be exported (shipped) directly from Articles Produced from Yarns Ghana into the US. — Be accompanied by appropriate The country of origin of articles made export documents for AGOA from yarns, strips twine cordage, rope or benefits. cables in the country in which the yarn etc. is produced. What Appropriate Export Document Is Needed To Support Export Articles Produced from Fabric Consignment To Receive AGOA Benefit? The country of origin of certain articles For the purpose of export documentation made from fabric in the following for AGOA, let us classify all export Harmonized Tariff System products into two (2) broad categories: classifications is the country in which the fabric is produced. Non-Textiles/Garments — Textiles/Garments — Labels badges, emblems — Quilted textile products For (a) Non-textiles/garments items all — Baby diapers export consignments must be — Handkerchiefs accompanied by GSP Certificate of — Shawls, scarves, mufflers Origin issued by the Ghana National — Blankets, traveling rugs Chamber of Commerce and Industry — Bed linen, table linen, toilet linen, (GNCCI) in addition to non-traditional kitchen linen exports from and relevant shipping — Curtains, drapes, interior blinds, documents. valances — Bedspreads, furnishings For (b) Textiles/garments items all — Sacks and bas for packing export consignments must be certified — Dust cloths, mop cloths, polishing by the application of a visa stamp issued cloths by CEPS on the original commercial — Labels, cords, cosset & foot laces invoice, and textile/garments certificate needlecraft sets or origin in addition to non-traditional — Comforters, quilts, pillows and export form and any relevant shipping cushions documents. Sub-Saharan African Countries Trade Benefits For Textiles and Designated As Eligible For the Apparel Benefits of AGOA AGOA extends duty-free and quota-free Raw materials e.g. fabrics, benefits to imports of a number of technology, accessories and other

127 inputs for manufacturing could be Where Can I Get The AGOA Visa sourced from any of the 34 under- Stamp And The Textiles/Garments listed Sub-Saharan African countries Certificate Of Origin? and the U.S. — CEPS Offices: — Republic of Benin — Headquarters, Accra, Ghana — Republic of Cape Verde — Ports/Airport — Republic of Cameroon — Border Points — Central African Republic — Republic of Chad When Can I Start Exporting To — Republic of Congo The US Under AGOA? — Republic of Djibouti — Immediately. — State of Eritrea — Ethiopia What Benefit Do I Get By — Gabonese Republic Exporting Under AGOA? — Republic of Ghana — Duty-free and quota-free access — Republic of Malawi allows you to export more to the — Republic of Mali US. — Islamic Republic of Mauritania — Opportunity to enter into — Republic of Namibia partnership/joint-ventures with — Republic of Mozambique US firms. — Republic of Niger — Opportunity to attract US — Federal Republic of Nigeria technology — Republic of Rwanda — Opportunity to improve your — Democratic Republic of Sao efficiency and capacity to export Tome and Principe to other countries. — Republic of Senegal — Republic of Seychelles The AGOA Secretariat — Republic of Sierra Leone Ministry of Trade and Industry — Republic of South Africa PO Box M47 — United Republic of Tanzania Accra, Ghana — Republic of Uganda — Republic of Zambia Rooms: 301, 302, and 207 Phones: (021) 686551, 686527, and * Until September 30 2004, inputs 686570 for apparel can be sourced from Telefax: (021) 664776 anywhere in the world. E-mail: mis- [email protected] Where Can I Get The GSP Certificate Of Origin? Websites The Ghana National Chamber of www.agoa.gov/www.ustr.gov Commerce and Industry (GNCCI) Kojo Thompson Road This brochure is meant to provide basic Accra, Ghana information about the African Growth & Tel. (021) 662427 Opportunity Act

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