EAC partner states look to benefit from more trade deals with the US
Sunday July 26 2015
East African countries are positioning themselves for enhanced benefits from trading with the United States of America after President Barack Obama signed a 10-year extension this month to a preferential deal that allows African countries to export goods to America without duty and quota restrictions.
Burundi, Kenya, Rwanda and Tanzania said in assessments made to coincide with President Obama’s visit to Nairobi and Addis Ababa that they were working to assist companies to export more to the US in terms of volumes and product lines under the Africa Growth and Opportunity Act (Agoa).
READ: Region to export products under Agoa as a bloc
Poor packaging, high transport costs, low quality standards and concentration on a few of the 6,500 allowable items are some of the challenges to the growth of exports from East Africa to the US.
Burundi director of external trade Gloriose Ntibarutaye said the political crisis in the country had delayed a review of strategy that was due last month to see how best to support companies to export to the US.
“We expected to review the strategy last month but due to the ongoing political environment this was not possible. The new strategy will be much more beneficial for Burundians,” she said.
Burundi exports coffee and tea to the US under the Generalised System of Preferences (GSP) rather than under Agoa.
Out of the $24.4 million’s worth of goods exported by Rwanda to the US in 2013, only $9,000 was classified under Agoa, mostly in the arts and crafts sector. The country has recently started to export coffee and pyrethrum but still has some way to go in taking finished products to the US market.
“Agoa has been successful when international manufacturers have worked with US brands and retailers to set up and source in Agoa eligible countries.
However, Rwanda has not been able to benefit from this, because of being less competitive,” said Robert Opila, who is in charge of Agoa programmes at the Ministry of Trade and Industries.
Mr Opila said Rwanda would benefit more from the initiative if tariffs on agricultural products, which are presently excluded from Agoa, were reduced.
“The standards under Agoa are very high therefore very few manufacturers or farmers can meet them and most of them use independent transport to export their products instead of collaborating so that they can reduce the cost of transport. They export small quantities, therefore are unable to make any profit,” said Hussein Kamote, director of research at the Confederation of Tanzania Industries.
Tanzania has set up a task force with the support of the US Presidential Trade Initiative, whose mandate is to come up with a strategy for increasing investments from the US and trade under Agoa.
Trade between the EAC countries and the US amounted to $2.8 billion in 2014: US exports to the EAC reached $2 billion while US imports from the region (which rose by 52 per cent from 2013), totalled $743 million.
James Kiiru, economic and international trade officer in Kenya’s Ministry of Foreign Affairs, said the EAC countries were pushing for preferential access to the US market with limited or no expectation of reciprocity in order to increase exports.
“The countries are also lobbying to have added value products exported to the US market. For example, when it come to exporting textiles and apparel, value added skins and hides can be exported to the US at a better price than when exported as raw material,” said Mr Kiiru.
He said partner states were also looking to diversify exports to include chemicals, minerals, machinery and energy-related products.
Kenya is the largest exporter to the US, followed by Tanzania, Uganda, Rwanda and Burundi.