Briefing On US Trade And Investment Policy In Africa

Briefing On U.S. Trade And Investment Policy In Africa And The Upcoming AGOA Forum

Special Briefing

Johnnie Carson
Assistant Secretary, Bureau of African Affairs

Deputy Trade Representative Ambassador Demetrios Marantis

Via Teleconference

June 13, 2012

MR. VENTRELL: Hi, everyone, and good afternoon. Thanks for being patient as we’re a couple minutes late here today. But today’s call is on-the-record. We have with us Assistant Secretary of State for African Affairs Johnnie Carson, and Deputy Trade Representative Ambassador Demetrios Marantis. They’re both here to discuss and to preview U.S. participation in the upcoming AGOA Forum.

And so without further ado, I’m going to turn it over to Assistant Secretary Carson. Go ahead.

ASSISTANT SECRETARY CARSON: Okay. Thank you very much. It’s a pleasure to be with all of you this afternoon to talk a little bit about the African Growth and Opportunity Act. AGOA was created in May of 2000, and the session which begins tomorrow is the 12th in a row. Last year’s African Growth and Opportunity Forum was held in Lusaka, Zambia. The AGOA is our most important trade legislation in respect to opening up our markets for African goods and services. We remain committed to AGOA. We believe that it has brought substantial economic, commercial, and trade benefits to a number of the countries that have participated. It is a program which is widely valued across the African continent. And it is a program which has resulted in a substantial increase in African exports into the United States market.

At this AGOA Forum, we will be hearing from the U.S. Trade Representative, Ambassador Ron Kirk, but we will also be hearing from Secretary of State Hillary Clinton, who has been very, very engaged in the AGOA Forum since becoming Secretary of State in 2009. She has been a co-host with Ambassador Kirk of the forum here in Washington in 2010. She attended the forum in Kenya in 2009, and also, again, the AGOA Forum in Lusaka, Zambia in 2011.

I’ll stop right there.

AMBASSADOR MARANTIS: And hi, this is Demetrios Marantis from USTR. I just want to echo that – what Johnnie said. We are really excited to be hosting the AGOA Forum this year. You all know that AGOA really is the cornerstone of our trade and economic relationship with Sub-Saharan Africa. As Johnnie said, we have had major success with AGOA over the years. It’s really helped to promote new nontraditional and value-added exports from Africa. There’s been a pretty substantial increase in trade over the past year. In particular with AGOA trade, it’s up 22 percent over last year.

But the big purpose, I think, of the AGOA Forum over the next two days is to talk about how to enhance Africa’s infrastructure for trade. And that’s important because our market is fully open to products coming from Africa. And the challenge over the years that AGOA has been in place is: How do African countries best avail themselves of the opportunities presented by AGOA? And one of the key bottlenecks has been in the area of infrastructure. And so by working through this AGOA Forum to help enhance Africa’s trade infrastructure, we hope that we will help our partners in Sub-Saharan Africa better take advantage of the opportunities that AGOA provides so that they may have better access to our market.

Another key issue that will come up that many of you have heard a lot about is third-country fabrics, which, as many of you know, is a critical provision of AGOA. It expires in September of this year if Congress doesn’t renew it. This provision really is fundamental to the survival of Africa’s textile and apparel sector, as well as to the continued effectiveness and success of AGOA. President Obama is ready to sign a third-country fabric legislation as soon as it gets to his desk once it’s passed by Congress, and I expect this issue will be front and center of the minds of our African counterparts who rely on third-country fabrics to help promote growth and opportunity in Africa.

So with that, I think we can move on to questions.

MR. VENTRELL: Operator, can we go ahead and get our first question?

OPERATOR: Thank you. And once again, if you do have a question, please press *1 to ask a question. The first question comes from Matt Schewel with the Inside U.S. Trade. Your line is open.

QUESTION: Hi, thank you for taking the call. This question is for Ambassador Marantis. You mentioned the third-country fabric provision, and Ambassador Kirk earlier today said he shared the frustration that Congress has delayed passing that. I guess in the Senate, it appears that Senator Hatch stopped an effort by Senator Baucus to move that forward. Has USTR and State engaged with Senator Hatch on this? And what’s been the outcome?

And secondly, would you say – how high on your priority list would you say that the passage of this AGOA third-country fabric bill along with the CAFTA fixes – how big of a priority is it for the Administration prior to when it expires in September? And if you can’t get it done by then, would you make those provisions retroactive so that they would apply from September 2012, whenever it is passed? Thanks.

AMBASSADOR MARANTIS: Thank you. This is a huge priority of the Administration, from the President on down. We have been working very hard interagency to urge Congress to renew the third-country fabric provision. We strongly support the bill that’s out there that contains renewal of third-country fabric as well as the CAFTA fixes, and we will continue to do everything we can to urge Congress to pass this as quickly as possible. The danger is the longer this stays out there the certainty that’s essential to buyers who want to source their goods from Africa, it becomes much less certain. And so the sooner Congress passes third-country fabric, the more certainty we can provide for both our African colleagues as well as for the U.S. companies that rely on AGOA third-country fabric for their sourcing.

QUESTION: Would you say that it’s a top priority? I mean, maybe after Russia PNTR? Or how would you characterize it on your trade policy legislative agenda?

AMBASSADOR MARANTIS: No one likes to pick among their children, but this is a top priority for us. This is critical that we get it done. And as I think Ambassador Kirk said today in his speech, the President intends to sign legislation renewing the third-country fabric provision as soon as Congress sends it to his desk. So we’re ready to go, and we will continue to do whatever we can to urge Congress to get it done.

QUESTION: Would you make it retroactive, or is that even a thought right now?

AMBASSADOR MARANTIS: I mean, that’s a question for Congress in terms of what legislation they pass. But we are working very hard to get this done quickly, and I hope we’re not in that position.

OPERATOR: Our next question comes from Emily Glass with newspaper Le Mauriciem. Your line is open.

QUESTION: Yes. Hi. This is actually Pamela Glass with Le Mauriciem (inaudible). In follow-up to that good question about the third-country fabric, I had actually two parts. First of all, it was mentioned by your earlier questioner about Senator Hatch having a hold on this really in getting it to the floor. And I was wondering what the Administration is planning to do as part of its strategy to get the senator to finally release this, if I could use that term, and support the legislation. And also, how aware is Congress, do you think, that this is such an important issue to the economies of many countries like Mauritius in terms of employment and trade issues? And those are my two questions. Thank you.

AMBASSADOR MARANTIS: Sure. On your first one, I mean, we have a very close working relationship with our committees of jurisdiction on trade issues, the Senate Finance and House Ways and Means Committee. And we are working closely with them to urge swift passage of the third-country fabric provision. I do think that there is increased awareness in Congress about how essential this is, as you said, to employment and to the continued survival of Africa’s textile and apparel sector. What’s going to be, I think, very valuable at the AGOA Forum is we are providing opportunities for interaction between our African counterparts and congressional staff and members of Congress so that they can have a continued dialogue amongst themselves about how important third-country fabric is to many countries from Mauritius to Lesotho to Kenya, you name it.

ASSISTANT SECRETARY CARSON: Demetrios, Johnnie Carson. Let me, if I could, add to what you’ve just said and note that we also in the Department of State have a very close relationship with the senior members of – in the House and the Senate on the Africa subcommittees. To this end, at the AGOA Forum, we have set aside time for the ranking Democrat and the ranking Republican on the Senate Foreign Relations Committee to actually address the AGOA Forum participants about third-country fiber and where it stands on the Hill, as well as to talk about other trade-related issues. So the Democratic chairman, Senator Coons, is scheduled to speak, and his counterpart, Senator Johnny Isakson, the ranking Republican from Georgia, is also scheduled to speak.

I and my other senior colleagues here in the Department of State have talked with both of those senators as well as others on the House and the Senate side on the Foreign Relations Committee about this. We also know that delegations of African ambassadors have also met with members of the House and the Senate, and there is, in fact, widespread discussion, at least on the Foreign Affairs committee, as we can see about this issue.

QUESTION: What do you think is the real hang up on this? Are we playing some politics going into the elections?

AMBASSADOR MARANTIS: I think there’s a widespread recognition that it’s important to renew third-country fabric. And I think we are – we the Administration – State, USTR – are working closely with Congress in order to do that.

ASSISTANT SECRETARY CARSON: But I would underscore that we have worked with members on both sides of the aisle and in both parties on this. And as I point out that Senator Johnny Isakson and Senator Coons will both be sharing of the stage together tomorrow on this issue. And both of them have a similar set of principles.

QUESTION: But what is your understanding as to why this hasn’t moved forward, with all the support coming out of the Administration?

AMBASSADOR MARANTIS: Should we move – I mean, I think we should probably move on to the next question.

QUESTION: Can we get an answer to that one, please?

AMBASSADOR MARANTIS: As I said, the – we are working very closely with our – with the House and Senate to try to get this done. I mean, we’re not in a position to speculate as to why something is moving quickly or not moving quickly. We are all working together with the same goal, which is to get third-country fabric done as soon as possible.

OPERATOR: Thank you. The next question comes from Len Bracken with Bloomberg. Your line is open.

QUESTION: Oh, hi, Ambassador Marantis. If I remember right, last year you spoke a little bit about possible AGOA reform. And I wonder if you could give us an update on some of the conversations you’ve had in that regard over the course of the past year. And also if you could remind me, what it will take – I mean, sort of the – for the seamless renewal of AGOA, when does it expire, and that sort of thing, and also what you would be on the lookout for in terms of infrastructure. Will there be any new initiatives on that front?

AMBASSADOR MARANTIS: Sure. Well, as you pointed out, at last year’s AGOA Forum, Secretary Clinton and Ambassador Kirk both announced that the Obama Administration supports a seamless renewal of AGOA. AGOA – the third-country fabric provision of AGOA expires in September, but the larger AGOA statute expires in 2015. And we are working to ensure, as Secretary Clinton and Ambassador Kirk said, that there is a seamless renewal. Again, it’s important for the certainty that our African counterparts, as well as those who rely on AGOA, that they have the certainty that AGOA will not expire and that there is a very smooth transition between the current AGOA and the future AGOA.

What AGOA will look like will ultimately be a decision for Congress, since they will have to work very carefully through the current statute and whether and how to amend it. But we are working very closely on an interagency basis to think about a lot of the questions that we are asked about AGOA and how to make the program work better. And I think the conference over the next two days will help answer some of the questions about infrastructure. For example, I think the participants in this year’s AGOA forum will focus on questions like how to develop the infrastructure to improve Africa’s competitiveness, how to improve the business climate, and how to improve effective regulation of key infrastructure sectors to promote more investment in infrastructure so that these countries in Sub-Saharan Africa can better take advantage of AGOA. How do you advance Africa’s regional economic integration by promoting things like trade facilitation, regulatory harmonization, et cetera?

So there are a lot of questions about how to secure a seamless renewal of AGOA and what a post-2015 AGOA should look like. And I hope that this forum this year we will get a lot of input from our counterparts in Africa as to what’s been working, what’s not been working, and that can help factor into the decisions that we and Congress will have to make before 2015.

OPERATOR: Next question comes from Doug Palmer with Reuters. Your line is open.

QUESTION: Hi. Thanks for doing this. Hey, Ambassador Marantis, could you just briefly explain to me, since I haven’t been following the issue, what it is the CAFTA fixes would do?

AMBASSADOR MARANTIS: Sure, Doug. The CAFTA fixes are designed to help promote the use of regional fabric in our trade with our CAFTA partners. We will get you, after this call, a more detailed fact sheet, because there are a number of prongs to the CAFTA fixes that I don’t remember off the top of my head.

QUESTION: Okay. Okay. And then my other questions have all been asked, kind of, in one way or another, but I thought I would try one more time. I mean, at the Brookings Institution today, Ambassador Kirk said that he’s – it seemed like there was almost universal support in Congress for this measure, but it seems like partisan politics was getting in the way of getting it done. So, I mean, are you all saying that Republicans for one reason or another, perhaps to embarrass the Administration by not having this done before the forum, have held up action on this?

AMBASSADOR MARANTIS: No, decidedly not, actually. I mean, we have strong bipartisan support, as Johnnie was saying, for third-country fabric. There is a wide recognition among Democrats and Republicans in Congress that AGOA third-country fabric is a vital provision for AGOA, for the competitiveness of Africa’s textile and apparel sector, and for the kinds of jobs that AGOA produces in Africa by creating opportunities to trade with the United States. So this is not a partisan issue. It is an issue of just getting – how do we best get it done as quickly as possible, what’s the right legislative vehicle to do it, and just how to move this quickly through the House and Senate calendars.

OPERATOR: The next question comes from Mr. Akande with the Empowered Newswire. Your line is open.

Mr. Akande, please check your mute button. Your line is open.

Mr. Akande, did you have a question?

MR. VENTRELL: Let’s go ahead to the next question.

QUESTION: Yes. My name is Laolu Akande. I’m sorry. I just got (inaudible). I just wanted to ask specifically, how will – how can the U.S. Government summarize the impact of AGOA on sub-Saharan countries, especially like Nigeria, in the last two years? And while we are still in the area of the economy, I’d like to know whether the United States as a leading member of the G-20 is ever going to consider bringing Nigeria to the G-20 or what it thinks a country like Nigeria ought to be doing to be a member of the G-20 club. Thank you.

AMBASSADOR MARANTIS: I can talk about that from the economic perspective, and Johnnie will, I’m sure, have things to add. I mean, AGOA has been a big success. It’s achieved measurable results over the years in terms of increasing bilateral trade between the United States and sub-Saharan Africa to, I believe, the figure is approximately $95 billion. And what’s been so important, I think, is that what AGOA has helped to do is to diversify trade between the United States and sub-Saharan Africa in terms of new products, value-added ag products, textile and apparel products, processed food, things that really weren’t traded between the U.S. and Africa before.

Nigeria has been a big beneficiary of AGOA. I believe that two-way trade between the U.S. and Nigeria is approximately $38 billion, and that’s up roughly 12 percent from last year. Nigeria has been a benefit – a big beneficiary under AGOA for petroleum products. But they’ve – but Nigeria has also benefitted from non-oil products, particularly cocoa, rubber, seeds, grains, nuts, and those types of products. And our challenge with Nigeria, as with any of the countries in Sub-Saharan Africa, is how do we take the success that we’ve had in AGOA and multiply it, and how do we work to increase the opportunities that Nigerians and other Sub-Saharan exporters have under AGOA to export to the United States.

ASSISTANT SECRETARY CARSON: Let me just add just two quick comments to say that since the inception of AGOA in the year 2000, there has been a 300 percent increase in total two-way trade between the United States and in Africa. And this shows substantial growth in non-oil sectors but especially textiles and leather-related goods, including shoes. South Africa has taken probably the greatest advantage in the diversity of products that it exports from that country into the U.S. market, including some exports of motor vehicles coming in from that country.

Let me say something about Nigeria otherwise as well. Nigeria is one of the two most important countries in Sub-Saharan Africa, along with South Africa. Its market is one of the largest given the fact that it has a population of 160-170 million people. It stands to benefit enormously from continued economic growth there. We hope that the benefit that it derives from AGOA will help to stimulate even further its economic growth and development, and we want generally to be a strong, engaged trading partner with Nigeria, given its large population and the enormous economic promise and potential that it holds for those who are engaged in commerce with it.

OPERATOR: The next question comes from Ababe with the Voice of Germany African Disk. Your line is open.

QUESTION: Thank you. Thank you so much. I have two questions. One is for Mr. Marantis. As we all know, there seems to be a shift in international trade and infrastructure in the Horn of Africa especially. China is becoming a major player in trade and economic infrastructure in Sub-Saharan Africa. I can mention Ethiopia. How do you think this shift of partnership in Sub-Saharan Africa, especially in Ethiopia, affect U.S. access to African markets?

And the second question is for Assistant Secretary Johnnie Carson. How do you relate building economic partnership with Sub-Saharan African countries with addressing the situation of democracy and human rights and good governance in those countries?

Thank you.

AMBASSADOR MARANTIS: On your first question, I mean, what’s been remarkable about particularly the past decade in Sub-Saharan Africa is the expansion of trade with the United States, with China, but more importantly the expansion of trade among Sub-Saharan African countries. And I think the work – whether it’s us, whether it’s the Chinese, whether it’s the EU does in terms of helping to develop Africa’s infrastructure – really helps to reinforce Africa’s own efforts to achieve regional economic integration. And that’s a huge priority of ours in the United States is to help underpin the initiatives underway, whether it’s through the tripartite negotiations to achieve a free trade agreement in Sub-Saharan Africa, whether it’s efforts that the East African Community is undertaking to further liberalize trade amongst its members. And there’s just – it’s been, and we’ve seen the effects of that in terms of increased trade – increased trade, increased investment, and increased prosperity.

ASSISTANT SECRETARY CARSON: On the issue of democracy and economic development, there is no tension between strengthening democratic institutions and promoting good governance and economic development and sustained economic growth. In fact, we like to believe – and I think we’re right – that countries that do in fact practice democracy, who do in fact have good governance, that have good government institutions, good rule of law, good judicial systems, and that have respect for contracts that fight corruption – all things that are common in democratic societies – also help to produce better environments for free market economic activities.

We think that democratic values help to put in place a respect for the rules of the game, whether it is respect for human rights or respect for labor contracts or respect for contracts between two companies or a company and an individual or a company and a government. Democratic values help to underpin respect for corporate contracts, protection of patents, protection of mining agreements, and protection of intellectual property. So there is no tension between democracy and market economies. And as I say, democracy with good institutions and judicial systems help to strengthen the opportunity for greater economic development and market growth.

MR. VENTRELL: Okay, everyone. I don’t think we have any additional questions in the queue, so thank you all for joining and take care this afternoon.

ENDS

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