AFRICA: Growth and Opportunity Act a Danger
The African Growth and Opportunity Act has now been signed into American law
as Title 1 of the US Trade and Development Act which received presidential
assent in May 2000. The Act purports to grant certain benefits to
Sub-Saharan African economies if African governments enact certain domestic
laws, and pursue certain measures.
African countries have already been invited by the US government to express
interest in their being designated eligible. A preliminary list of eligible
countries is expected to be completed at least by the last quarter of this
year.
African governments must not pursue those measures and laws. If they do,
they will be accepting all the unfair measures that exist in the WTO rules
that they are now struggling to change in the WTO. The US is one of the
major powers blocking the efforts to change these unfair measures. In
addition, they will be giving in to the new issues that the US and other
major powers want to introduce into the WTO and to which African and other
developing countries are opposed. All this will be in exchange for very
little, because the benefits that the Act offers are illusory.
Concern has been expressed from various quarters about the dangers posed by
the Act. The OAU Conference of African Ministers of Trade meeting in Cairo
last September cautioned against African countries rushing to join the Act
in view of real danger that the Act will undermined on-going African
economic initiatives. Many African delegates at the WTO are worried that all
their efforts to reverse the imbalances of the WTO agreements will be
destroyed. Some otherwise free-trade economists have publicly denounced this
Act.
Illusory Benefits...
AGOA promises African economies general duty and quota free access for
African products in the American market. This is dubious, because: (1) the
American government will grant access only to goods that it decides may not
negatively affect American producers. This is why coffee, sugar and other
products of economic benefit are not covered. (2) in the long-term, tariff
duties are supposed to come down any way, and quota removed, as part of WTO
rules.
AGOA offers in particular duty and quota- free access for African textiles
and apparels to the American market. This is also dubious, because, in
effect, only those products and apparel using fabric and yarns produced from
America will have easy access to the US market. Textile products made from
yarn and fabric from African countries and other areas will be subject to
severe constraints. The access in these cases will be granted only on yearly
basis, and should not exceed a total of 3.5% of all apparel imported into
the US in eight years. At the same time, the US government can at any time
withdraw this benefit if it determines there is a sudden surge in imports of
textile products into the US which will threaten its own domestic
industries.
The requirement for US raw materials to be used will work against the
ability of African countries to develop, either individually or together,
their own domestic raw materials base to textiles, and therefore undermine
the development of integrated textile industry in Africa. Moreover,
importing US raw materials for use in textile production may turn out to be
expensive in view of transport and other costs, which means in the end
African textiles products exported to the US may not be competitive after
all.
... Real Concessions from Africa
In exchange for these illusory benefits, the AGOA demands that African
countries must, among others things:
eliminate barriers to all US trade and investment in Africa. This includes a demand for American firms to be given equal treatment as African
firms, as well as for high standards of intellectual property protection as
contained in the TRIPs agreement in the WTOpursue further privatisation, remove government subsidies and price
controls,guarantee international labour standards, and set minimum age for child
labour;not engage in any act that undermines US national security and foreign
policy interests
The Act makes it clear that these conditions must be understood in the
context of the standards that operate in the WTO. For instance, the Act
instructs the President to "encourage" African "countries to bring their
legal regimes in compliance with the standards of the WTO". African
countries are also expected to liberalise their services sectors, by making
further commitments in the WTO General Agreement in Trade in Services (GATS)
in order to remove tariff and non-tariff barriers.
Some of these requirements are contained in the WTO agreements which African
governments have found to be to their disadvantage and are struggling to
change. They include issues such as TRIPS, TRIMS and agriculture support.
Other requirements like labour standards and investment form part of the new
issues which the US has been trying to promote, against the wishes of
African and other developing countries.
Therefore by making these requirement as conditionality for some supposed
benefits, the AGOA sets a trap for African governments to concede to the
wishes that the US government is having difficulty achieving in the WTO.
AGOA will also set African countries against each other. It proposes the
establishment of free-trade areas. These, together with other so-called
supportive measures for African economies are aimed only at
"growth-oriented" economies. A few countries will be selected, and the
poorer ones left alone. Above all, as noted by the Cairo Conference of
African Mnisters of Trade, this will simply undermine regional economic
co-operation efforts by African countries.
Proposed Action by civil society organisations:
African civil society organisations must join in the effort to save African
countries from the AGOA trap. To do this, we propose the following actions:
Find out whether your country has written to the US government
expressing interest in eligibility.Send the attached documents to the relevant government authorities
in your country, with a cover letter warning them of the dangers of AGOA.Urge the government NOT TO APPLY to become an "eligible country",
that is, it should not join AGOAInform other NGOs of the existence and threat of AGOA, form a
national committee of civil society organisations (including Trade Unions)
to campaign against your government applying to become an eligible country
of AGOAAlert the media and public about this issue.
- 110 Trade Justice