US President Joe Biden’s administration has invited African leaders to Washington, DC next week. African leaders should focus on three big priorities on the summit’s trade agenda. These are approaching trade issues as a bloc. Second, seeking the renewal of the Africa Growth and Opportunity Act (AGOA) and third, defending the AfCFTA.
First, African countries should approach trade issues at the summit as a bloc. Strength comes in numbers especially considering the size of the US economy relative to Africa. Other major regions like the Association of South-East Asian Nations (ASEAN) often act as a bloc to ensure their continued geopolitical relevance. The advantage of negotiating as a group is that it is more likely to give African leaders more bargaining power than having the US negotiate individual free trade agreements with individual countries. Negotiating as a bloc will further the African Union’s objectives of achieving trade integration at the continental level, under the African Continental Free Trade Area (AfCFTA).
Second, African leaders should urge the Biden administration to lay down the groundwork for renewing the AGOA in 2025. There is bipartisan support for AGOA’s renewal in the US Congress. However, African leaders should not take it for granted. AGOA, which provides duty-free access to the US, is one of the foundational pillars of US-Africa trade relations.
AGOA’s importance lies in the fact that African countries are not required to give compensating concessions to the US in return for the duty-free access. However, eligibility for that duty-free access is conditioned on pre-defined criteria such as human rights and free market reforms. A related issue is that eligible African countries are not fully utilising their AGOA benefits. What can be done about this should be a topic for discussion at the AGOA forum which will be convened contemporaneously with the US-Africa leaders’ summit.
Third, African leaders should also defend the AfCFTA at the US-Africa leaders’ summit. This does not mean merely asking Washington for technical or capacity building assistance to promote African exports. Rather, the idea would be to make it clear to the United States that the regional integration agenda is a long overdue and important agenda for self-sustaining growth and development on the continent. Defending the AfCFTA, especially from US-African bilateral trade deals would also build a more respectful and stronger engagement that will promote the kind of economic growth, trade, investment and sustainable development that African countries need.
Bilateral trade deals
Defending the AfCFTA also requires African countries committing to refrain from bilateral trade deals with the US since such bilateral trade deals will compromise the effectiveness of the AfCFTA. In addition, bilateral trade deals with the US will likely contravene the commitments African countries have made at the sub-regional level. For example, recently the East African Court of Justice held that certain bilateral trade deals Kenya had entered into with the United States contravene the East African Community Law.
Another downside is that bilateral trade deals create more direct and less public opportunities for developed economies like the US to pressure weaker governments to make extensive commitments that will undermine the goal of creating a single African market.
In fact, if bilateral trade deals like the on and off US-Kenya FTA succeed, those bilateral trade deals will displace AGOA as the foundational pillar and template for US-Africa trade relations. This would undermine the quest to remove external economic and political domination, one of the primary factors that motivated the AfCFTA.
Business interests in the US see bilateral trade deals as avenues of getting unlimited access to African markets and want to use Kenya as a foothold to extending their influence in Africa. For example, there are reports about how the plastics and a variety of agricultural sectors in the United States want to rollback Kenyan environmental safeguards that have banned the use of plastics or bans of GMOs.
Business interests can lobby to advance their own interests at the expense of African interests more easily than if they were negotiating with African countries in one bloc or if negotiations were at a sub-regional level like the EAC.
Dangers of bilateral trade deals
The danger of bilateral trade deals is amplified by the fact that the kinds of rules included in US bilateral trade agreements would require African countries to open up opportunities US companies including in activities that were formerly provided by public monopolies such as postal and courier services and telecommunications, water and electricity. These are all preventable consequences if African leaders defend the AfCFTA during the Africa-US leaders’ summit as well as at the AGOA forum.
Another major threat of US bilateral trade deals is that they require signatory countries to remove agricultural tariffs. Besides the revenue losses that would result from removing tariffs on agricultural products, such zeroing of tariffs would also undermine carefully crafted ceiling tariff bindings many African countries adopted during the Uruguay Round. These ceiling bindings give African countries a lot of policy flexibility to support its agro-manufacturing plans. Carefully crafted ceiling tariff bindings are consistent with the objective of the WTO not to force developing countries to open their economies to the same degree as developed countries. Another consequence of such zeroing is that it would force Kenya to be flooded with cheap and heavily subsidised US agricultural imports. This could displace family farming that is centred around maize and threaten food security and nutrition initiatives on the continent.
As they descend on Washington DC, the foregoing concerns should be at the centre of what African leaders hope to bring to the trade table. Anything less would compromise the progress Africa is making to build a pan-African trade regime that keeps multinationals, especially in the pharmaceutical, agro-business and big tech sectors out of Africa so that Africa can grow its own enterprises that would spur economic growth and provide decent jobs for Africans.
Mr Gathii is an editor, Afronomicslaw.org and Wing-Tat Lee Chair of International Law, Loyola University Chicago School of Law.