Trade

Last updated June 2009

Africa is a far more significant trading partner for the U.S. than is widely realized. The continent holds abundant human and natural resources, and the U.S. is Africa's largest single country market Two-way trade between the U.S. and sub-Saharan Africa was over $70 billion in 2006, more than double the total of $32.5 billion in 2003.

Trade represents a key element in U.S. policy toward Africa. Although successive U.S. administrations have promoted trade as the engine of African growth, the reality is that the United States continues to pursue trade policies that are antithetical to Africa's interests. U.S. trade policies have tended to perpetuate Africa's role as a source of raw materials and cheap labor. The African Growth and Opportunity Act (AGOA) was approved by Congress in 2000 and extended until 2015 in December 2006. AGOA was intended to offer incentives to African countries to open their markets, but has brought very little benefit to a few countries and has not promoted sustainable economic development.

Heightened U.S. interest in Africa's oil supply has increased the continent's strategic importance to the U.S. and its future energy policies. As a result, U.S. trade with Africa is highly concentrated on a small number of major oil producers: Nigeria, Angola, Algeria and Gabon. The United States is the world's largest oil consumer in the world, using about 20 million barrels a day. It is also the world's largest importer of petroleum. The African continent is a relatively untapped source of these resources, though it only accounts for about 9% of the world's proven petroleum reserves. A U.S. Department of Energy report projected that African oil production will rise 91% between 2002 and 2025, and as a result, the U.S. has become increasingly interested in buying from African countries. By 2015, the U.S. will have to import over 60% of its total crude oil needs, and a rising percentage of that oil is African. In 2006, 22% of the US total crude oil imports were from Africa, a 200% increase since 2002.

This newfound interest in African oil reserves has made the area of strategic national interest for the United States; as a result, United States African Command (AFRICOM) was established to maintain a military presence on the continent and help train and arm African national militaries. The command became operational in October 2008. However, according to the commander and deputy commander of the operation, one of the primary missions of AFRICOM is to protect unfettered access to oil and other resources.

In order for trade to boost African growth, the U.S. must look beyond oil and its accompanying militarization to focus on policies that will benefit African economies instead of paving the way for the easy extraction of Africa's resources. It must commit to simplifying expanded market access for African goods and ending the double standard in international trade rules. This will require dismantling trade barriers that severely restrict access for African products to U.S. markets. It will also require reducing subsidies that hinder African exports, especially in the agricultural sector.

The debate over agricultural subsidies led to the breakdown of the 2003 World Trade Organization (WTO) Ministerial in Cancun, Mexico. This meeting was meant to establish global rules to achieve the objectives outlined by the Doha WTO round in 2001, such as fairer international trade rules. In 2005, at WTO talks in Hong Kong, the year 2013 was set as a deadline for the elimination of unfair agricultural subsidies. Little progress has been made since then, and negotiations have yet to resume since their collapse in July 2006. The failure of the Doha round has starkly illustrated the lack of political will among wealthy nations to seriously address the gross imbalances in the current global trade system.

The June 2007 communique produced by the G8 summit in Heiligendamm, Germany reflects a similar attitude. Instead of offering concrete new proposals, the G8 has chosen to rehash empty rhetoric while ignoring the exploitative trade initiatives its members are pursuing individually.

Restrictions on African access to U.S. markets, combined with agricultural subsidies to U.S. agribusinesses, undermine Africa's competitiveness and continue to constrict the continent's trade-related development. For example, U.S. cotton subsidies reached almost $5 billion in 2005, in violation of WTO rules, lowering global prices and harming the livelihoods of more than 20 million cotton farmers in Africa. Ignoring the false comparative advantage produced by subsidies, it costs three times more to produce one pound of cotton in the U.S. than in Burkina Faso. According to the 2005 U.N. Human Development Report, the U.S. and other rich countries pay their farmers $1 billion in subsidies per day.

President Barack Obama initially proposed a cut in farm subsidies that would have saved $9.7 billion in April 2009, but was defeated by agricultural interests in the House and Senate.

Increased globalization brings about complex discussions about intellectual property and access to medicines as an aspect of trade relations. Specific actions that President Barack Obama and the U.S. Congress could take to ensure that trade concerning these two aspects benefit those who are most in need would include: promoting the availability of affordable life-saving medications and protect public health in developing countries, promoting innovation to develop and distribute new, effective medicines that address essential health needs without limiting access to existing or future medical products, respecting the rights of all government to regulate pharmaceutical markets and ensure equitable access, and finally, promoting transparency and the integration of public health interests with trade policy. These actions would open up developing markets, including African ones, to medicines from abroad, but also from those manufactured in developing countries to cut the cost of saving lives. By maintaining the supremacy of intellectual property in developing countries deprives struggling countries with the largest disease burdens of affordable medications. Making medication easily available and affordable, by producing generic versions or by allowing developing countries to produce their own generic versions would make health the priority over intellectual property rights, as it should be.

African countries remain over-dependent on primary commodities and are extremely vulnerable to swings in market prices. An enhanced economic partnership between the U.S. and African countries requires more than just expanded trade. The insistence of the U.S. on free trade and free market solutions to Africa's development challenges fails to address the structural sources of the continent's poverty. While trade is certainly one important pillar within the framework of United States economic cooperation with Africa, it is not sufficient to bring about economic development. Investment, 100% debt cancellation for all African countries and development assistance should also be essential components of a just economic relationship between the United States and Africa.

Links

Tens of Thousands of Schoolchildren Nationwide Will Protest Poverty and Child Labor-Tainted Cocoa during Third Annual Reverse Trick-or-Treating this Halloween
October 22, 2009
"Kids across all 50 U.S. States and Canada will urge nearly a quarter million households to shift purchasing to Fair Trade certified chocolate, coffee, etc by handing Fair Trade chocolate to adults..."  Go >

Tens of Thousands of Schoolchildren Nationwide Will Protest Poverty and Child Labor-Tainted Cocoa during Third Annual Reverse Trick-or-Treating this Halloween
October 1, 2009
"Kids across all 50 U.S. States and Canada will urge nearly a quarter million households to shift purchasing to Fair Trade certified chocolate, coffee, etc by handing Fair Trade chocolate to adults..."  Go >

'Owning up to Africa': Gerald LeMelle on Sirius XM Satellite Radio
August 14, 2009
"Secretary of State Clinton in Africa: Click here to download an interview with Gerald LeMelle, executive director of Africa Action on Sirius XM Satellite Radio (33min:45)..."  Go >

"U.S. works to rebuild ties with South Africa" -L.A. Times
August 10, 2009
"This article by Robyn Dixon at the L.A. Times quotes Gerald LeMelle, executive director at Africa Action. Click here to read more..."  Go >

Secretary of State Clinton Begins Tour of Seven African Countries, Civil Society Responds
August 4, 2009
"This letter, endorsed by 20 organizations and 15 independent analyst, urge a new U.S. engagement with Africa. The letter takes much of the rhetoric of President's Obama's Ghana speech and couples it with specific policy prescriptions targeting the U.S. State Department upon the beginning of Secretary Clinton's trip to Africa (August 5-14)..."  Go >

Media Briefing Booklet: President Barack Obama's Visit to Ghana July 10, 2009
July 10, 2009
"Over the past decade, Africa’s status in U.S. national security policy has risen dramatically, for three main reasons: America’s growing dependence on Africa’s oil exports, Africa’s importance as a major battlefield in America’s “Global War on Terrorism,” and Africa’s central position in the global competition between America and China for economic and political power..."  Go >

U.S. Civil Society Platform on Trade-Related Intellectual Property and Access to Medicines Issues
June 10, 2009
"Twenty-six U.S. consumer, development, HIV/AIDS, public health and religious groups released a common platform on trade-related intellectual property and access to medicines issues. The document broadly outlines the common policy agenda these groups are pursuing in the areas of access to medicines, innovation and transparency..."  Go >

AGOA Homepage
"The African Growth and Opportunity Act (AGOA) website provides information about trade between the U.S. and Africa. In addition to the legislation itself, it provides the latest trade news, reports, trade statistics, etc..."  Go >

The G-8 Announcement: Great Expectations Betrayed
July 8, 2005
"Africa Action today vehemently rejected the G-8 Summit statement on reducing poverty in Africa as inadequate and fraudulent. For all its hype, the G-8 summit failed to deliver on the promise of debt cancellation, trade reform, and aid..."  Go >

The Economics of Failure: The Real Costs of ‘Free’ Trade for Poor Countries
"This June 2005 Christian Aid paper argues that “free trade” conditions attached to aid and debt cancellation do more harm than good. Trade liberalization has cost sub-Saharan Africa US$272 billion over the past 20 years, much more than the continent received in aid..."  Go >

The Walking Zombie of the WTO
"Global Exchange summary of developments in the World Trade Organization (WTO). It also reports on the meeting of more than 240 activists from 23 countries in Hong Kong to plan a strategy for mobilization against the WTO meeting in December..."  Go >

International Trade Policy: Violently Intent on keeping us in Poverty
"Riaz Tayob of the Southern and Eastern African Trade Information and Negotiations Institute (SEATINI) argues that Africa has religiously followed of the prescriptions of the former colonial powers with a spectacularly tragic outcome..."  Go >

Make Trade Fair
"Oxfam’s Make Trade Fair Campaign aims to change world trade rules so that trade can make a real difference in the fight against global poverty. It calls for improving market access for poor countries and ending the cycle of subsidized agricultural over-production and export dumping by rich countries..."  Go >

U.S. & Nigeria: Thinking about Oil
"Africa Action’s Salih Booker and Bill Minter argue that if the U.S. wants to help Nigeria, Washington must look beyond Nigeria's oil and consider its people and their environment. After years of internal conflict and military rule, oil-rich Nigeria is once again one of Africa's most influential nations. Yet it still confronts staggering poverty and corruption..."  Go >

U.S. Oil Politics in the 'Kuwait of Africa'
Ken Silverstein explores the implications of the discovery of oil in Equatorial Guinea. Because of this oil, there's been a slow but steady blossoming of relations between George W. Bush's administration and Brig. Gen. Teodoro Obiang Nguema Mbasogo, who took power in a coup in 1979..."  Go >

Statement on U.S. Economic Cooperation with Africa
October 29, 2001 - Africa Action, Oxfam America, ActionAid USA & Third World Network - Africa
"A statement from Africa Action, Oxfam America, and ActionAid USA calling for a new approach to U.S. economic cooperation with Africa. It was timed to to coincide with the launch of the first U.S.- Sub-Saharan Africa Trade and Economic Cooperation Forum hosted by the White House and involving several hundred African and U.S. officials..."  Go >

NAFTA for Africa
"Public Citizen published this analysis of the African Growth and Opportunity Act (AGOA). It challenges AGOA as undermining African interests in sovereign, equitable development in order to promote U.S. corporate control of African economies..."  Go >

WTO Food and Agriculture Rules: Briefing on Critical Issues
"Vandana Shiva explores the implications of the World Trade Organization’s rules on agriculture. She argues that no country should be forced to open its borders to food commodities, especially to foods that a nation already provides for itself and that minimum access serves only the interests of the exporter. Specifically, it benefits agribusiness, as it forces open new markets further expanding the control of corporations..."  Go >

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