African countries will be using the Africa Growth and Opportunity Act (AGOA) forum in Nairobi to push for a comprehensive revision of key provisions of U.S. legislation to remove hidden barriers to trade.
The delegates attending the forum which entered its second day on Wednesday said AGOA should be amended to make it a permanent trade program if it is to achieve the intended purpose of strengthening trade between Sub-Saharan Africa and Washington.
African Union deputy chairperson Erastus Mwencha said stringent quality and lengthy certification processes had prevented many African producers from exporting to the U.S. under what has been described as the most lucrative trade preference legislation ever passed by the American Congress.
Mwencha, who is the immediate former Secretary General of COMESA, told participants from 40 African countries that the Act should be investment-friendly and predictable to encourage investors to take advantage of the opportunities it presents.
"This element is lacking in the Act and that is an area that we could try to reinforce in AGOA. Many investors will always be hesitant to embark on AGOA programs especially when they don't know that they will be eligible," he said.
This, he further stressed, was particularly true in situations where -- if there's a breakdown in dialogue between the U.S. and a member state -- the business community would bear the brunt of such a standoff.
The Act, which is part of the U.S. legislation and meant to liberalize market access to the country, initially covered the eight-year period from October 2000 to September 2008, but amendments signed into law by former U.S. President George W. Bush in July 2004 further extended it to 2015.
"We intend to use this forum to press for improvement in quality certification processes, especially in sanitary and phytosanitary (SPS) assessment," said Mwencha.
U.S. International Trade Commission (USITC) data shows that trade between Africa and the world's largest economy is still dominated by export of natural resources.
That reality has left four oil-producing countries with more than 90 percent of the 56 billion U.S. dollars that Africa earned from the sale of goods and services to the U.S. under the AGOA pact last year.
The USITC data shows that Africa's export of crude oil, precious metals, medicinal chemicals, oil seeds, steel grew steadily under AGOA while exports of motor vehicles and parts, computer peripherals, consumer electronics, lumber and apparel dropped.
"The U.S. government can also include in the legislation some investment provisions that would encourage U.S. investors to look at Africa," he added.
He pointed out this would help dispel the image of Africa as a politically instable, poor and conflict laden and disease stricken continent.
The AU deputy chairperson proposed the linking of AGOA to other global trade initiatives such as the World Trade Organization, G20 and G8 forums which would go a long way in integrating Africa into the global economy.
Trade between U.S. and sub-Saharan Africa has more than tripled since the trade law took effect but critics say that the impact has been inflated by U.S. demand for oil from energy producers such as Angola and Nigeria.
U.S. Secretary of State Hillary Clinton is expected to highlight what the administration sees as a key achievement so far for Africa -- a 20-billion-U.S. dollar fund to boost agriculture and ease hunger in poor nations.
The fund was sealed by Obama and other leaders of the Group of Eight rich nations last month in Italy.
Clinton will address a forum of some 40 nations covered by the African Growth and Opportunity Act, a U.S. law giving market access to sub-Saharan nations committed to democracy and free markets.
Some African nations have voiced concern over moves in the U.S. Congress to extend trade preferences to other poor countries such as Bangladesh and Cambodia.
Mwencha also urged Washington to assist Africa to diversify its export products which would in turn enable the continent to further penetrate the American market.
Efforts to diversify and add value to Africa's eligible countries' products have borne fruit with the 2008 figures showing U.S. imports under AGOA were 66.3 billion dollars, which was approximately 30 percent higher than in 2007.
Kenya, which has more than 6,000 product lines to sell to the U. S. under AGOA, has mainly exported textile and apparel, a crowed segment with more than 27 players from Africa alone.
Kenya also has a comparative advantage in fresh produce that has made the leading exporter to Europe but traders said slow process of clearing agricultural products destined for the U.S. has discouraged them from pursuing the market.
Kenya holds the right to export pastries, mango juice, avocado, fish, crafts, animal and leather products under the quota-free and duty free instrument but textiles still account for 96 percent of the country's exports to the U.S.
Speaking while opening the forum Tuesday, Kenyan Prime Minister Raila Odinga said it was time African states came up with new ways to tackle the challenges facing them particularly when the world is grappling with the effects of an economic slump.
Odinga challenged African countries to open up borders for the movement of goods and people and to promote trade within the region.
Odinga reiterated the need for African countries to focus on investment as the key to economic growth. "We must trade our way out of the economic crisis, and make inter-African trade a priority within AGOA, if we have to realize full benefits."
He noted with concern that whereas it is easier for a businessman from outside Africa to enter an African country, the same was not possible amongst African countries.
Odinga said Africa must focus on building regional trade, which remains so small, that almost the entire three per cent of global trade that Africa conducts is with the industrialized countries.
He warned that Africa's dependency on aid to resolve development needs has hurt development. Increased trade, he observed is the only way out of the continent's problems and called on leaders to exploit Washington's a commitment to support Africa's efforts to do much better.
Meanwhile, visiting U.S. Secretary of Agriculture Tom Vilsack said President Obama is seeking 70 billion dollars from Congress to support agricultural development in Africa.
Vilsack who is among the top U.S. government officials attending the AGOA forum in Nairobi, however, said African governments must develop strategies to ensure food security.
"The President is anxious to know what Kenyans want from us. This is not America coming in and saying this is what we will do for you. This is a partnership and we want you to tell us what you need," Vilsack told journalists during a tour of the Kenya Agricultural Research Institute (KARI).
"From my observations, there is great opportunity. With improved seed technology, proper use of fertiliser, land cultivation techniques and sustainable agriculture, productivity can be increased significantly."
Vilsack urged Kenya to identify areas of cooperation with the American government in terms of food security instead of constantly relying on handouts.
Vilsack said President Obama's administration was keen on creating partnerships that strengthen a country rather than making them dependent.
He said the government needed to seriously consult with Kenyans to find what is of most importance to them so as to guide the U.S. government prioritise its assistance.
The country is the second largest food assistance recipient from the U.S. in Africa after Mozambique having received over 69 million dollars in food assistance in the last four years.
Vilsack said the Obama administration was trying to shed the image of an aid donor and build partnerships that would ensure the Sub-Saharan Africa is food secure.
"We hope to be able to provide resources, not only monetary but also expertise and knowledge of scientists that we have backed home that can be shared making a greater impact to Kenyans."
Statistics from the ministry of trade says Kenya's volume of exports to the U.S. have been minimal.
For instance, in 2006, export to the U.S. amounted to 21 billion shillings (about 274 million U.S. dollars) and 19.3 billion shillings in 2007 against imports of 24.7 billion shillings in 2006 and 44.5 billion shillings in 2007.
The slow pace of economic growth has denied Kenya the ability to benefit from AGOA. The textile industry is one of the leading players in the AGOA arena, with firms located in the export processing zones having supply contracts with U.S. buyers.
While the Kenyan government is making efforts to revive the cotton industry, progress has been slow and frustrating. A large bulk of lint used by textile firms within export processing zones is imported from neighboring countries at great cost.