US-Africa Trade: Key to Driving Africa’s Post-COVID-19 Recovery

We’re pleased to share this op-ed co-authored by Rosa Whitaker and Stephen Lande, published on U.S. News on June 3, 2020. Africa urgently needs global support for a COVID-19 stimulus package. Expanded trade through implementation of the African Continental Free Trade Agreement AfCFTA would provide the most sustainable economic stimulus for a region that has just been plunged into a negative growth cycle.

Africa has seen its jobs offshored for centuries. As colonies, Africa’s embryonic nations were set up to supply industrialized economies with low-cost raw materials which they would then have to buy back as manufacturers, value having been added far from their shores. This baked in a pernicious paradigm that stifled the continent’s post-independence industrialization and kept its markets small, disconnected and starved of investment.

Building on regional trade blocs like the six-nation East African Community (EAC), the AfCFTA represents the most far-reaching initiative yet undertaken to break with the past and create an integrated African economy based on intra-continental value chains. Today, only 18% of Africa’s trade is with African countries. The aim is to make that 50% by 2030.

Understandably, some have reacted with skepticism to the announcement by President Trump and Kenya’s President Uhuru Kenyatta that they will seek a bilateral free trade agreement. It would be the first between the U.S. and an African nation. The fear is that such an agreement would be at cross-purposes with both the EAC, of which Kenya is a member, and the AfCFTA, which 55 nations have signed and 29, again including Kenya, have thus far ratified.

We would like to believe this fear is unfounded. In multiple forums, including the U.S. Chamber of Commerce, President Kenyatta has emphasized that the successful completion of the AfCFTA is his top priority. Ambassador and U.S. Trade Presentative Robert Lighthizer has stated for the record that any agreement with Kenya “must complement Africa’s regional integration efforts.” On behalf of President Trump, he has pledged the U.S. to “help(ing) the AfCFTA achieve its fullest potential.”

While the novel coronavirus pandemic has stalled implementation of the AfCFTA’s initial phase, the agreement is critical to the continent’s recovery from what the World Bank projects will be a 5% contraction this year. Says Wamkele Mene, the newly appointed secretary general of the AfCFTA secretariat: “For Africa, the stimulus package is the … implementation of this agreement. Increased inter-African trade is what will drive economic development post-COVID-19.”

Can U.S. trade negotiators follow through with President Trump’s pledge for a trade pact? Yes. Lighthizer has proven himself adept at thinking outside the box and not allowing himself to be strait-jacketed by precedent – witness the innovative provisions of the U.S.-Mexico-Canada agreement he negotiated making duty-free entry into the U.S. for certain vehicles contingent on minimum wage levels. The agreement received strong bipartisan support showing this U.S. trade representative’s ability to work across party lines.

U.S.-Africa trade relations have been governed for the past 20 years by the African Growth and Opportunity Act (AGOA), whose aim has been to stimulate investment in African manufacturing by giving qualified African countries – the majority – duty-free access to the U.S. market for virtually anything they can make, grow or extract from the ground, without our requiring reciprocal concessions. AGOA’s rules of origin have encouraged the development of regional value chains with some success, but not to the extent one might have hoped.

AGOA expires in 2025. Ideally it would be superseded by a U.S.-Africa free trade agreement, but that is too ambitious an undertaking for the time available. A consensus African negotiating position is too much to ask at this stage. African trade negotiators already have their hands full completing the AfCFTA. Nonetheless, a bilateral agreement with Kenya does not have to be seen as second prize if it is of sufficiently high quality and the parties are resolved to serve the objectives of the AfCFTA.

At minimum, they should respect the AfCFTA requirement that Kenya not treat the U.S. or any other third country more favorably than AfCFTA members. They should ensure that any duty preferences Kenya grants the U.S. are coordinated with Kenya’s EAC partners and incorporated into the community’s common external tariff. And they should work closely with the African Union and AfCFTA secretariat, as well as like-minded African countries, in crafting non-tariff disciplines on matters such as investment, intellectual property, competition, government procurement and e-commerce that could serve as models for the continental agreement.

If the U.S.-Kenya free trade agreement is to be a model, negotiators will have to keep its broader applicability to Africa at top of mind. The administration is right to seek a comprehensive agreement but if its terms are too stringent, it will cease to be a model and it will not contribute to the completion of the AfCFTA, let alone an AfCFTA that accommodates U.S. wishes and concerns.

The U.S. has much more to gain from a well-crafted and successful AfCFTA than it does from obtaining every concession it might seek from Kenya. The latter is a market of 60 million. AfCFTA encompasses over a billion. Moreover, an integrated Africa will be much better placed to resist pressures from China, the European Union and elsewhere to adopt policies that put U.S. firms at a disadvantage.