Monday, April 27, 2009

Trade Pattern Tells a Story

The pattern of trade between the United States and the countries of Africa tells an interesting tale of mutual needs and of how relationships and economic and logistical forces determine trade’s winners and losers.

First of all, the United States buys about a quarter of total African exports – about US$66 billion out of US$290 billion in 2008. That makes us a significant buyer, but not a dominant buyer. The Europeans buy nearly three times what we buy from Africa, but of course they have a longstanding relationship with their former colonies that we do not have, as well as established transportation routes that make economic sense.

We still have not cracked the agriculture sector in terms of U.S.-Africa trade, even though two-thirds of Africans are engaged in that sector. Aside from oil, diamonds, gold and platinum, the major American imports from Africa are US$2 billion in automotive parts, all from South Africa, and US$1.3 billion in steel, principally from South Africa but some from Zimbabwe. Few African countries can match South Africa in terms of industrial exports, except for clothing. The US$1.2 billion in apparel the United States purchased from Africa came mostly from Lesotho, Swaziland, Kenya, Madagascar and Mauritius, with South Africa, Botswana and Ethiopia contributing smaller amounts.

However, we will never fully realize the goals of the African Growth and Opportunity Act (AGOA) without enlarging our agriculture trade with African countries. Currently, about half our agricultural imports from Africa consist of cocoa from Cote d’Ivoire. There are other significant farm exports that include South African wine, fruit and processed food; Ethiopian coffee and niger seed (often sold as bird seed); Kenyan flowers and tea, and Madagascan vanilla. That isn’t enough to raise Africans out of poverty across the continent.

If we are serious about the Millennium Development Goals and other projects and schemes to “lift all boats” in Africa economically, then the U.S. government, in conjunction with the private sector and civil society, must work to bridge the gaps in AGOA. We know what the gaps are; now we must act on our knowledge.

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