On the Frontlines of U.S.-Africa Trade

FROM THE 2009 U.S.-AFRICA BUSINESS SUMMIT

When the Corporate Council on Africa was established in 1993 with the encouragement of the U.S. government, the original concept was that such a grouping of U.S. companies doing business in Africa would make it easier for the federal government to engage in trade discussions without having to speak with individual companies. Since then, that concept has grown into much more than its originators thought at the time.

The combined efforts of former Ambassador David Miller, Percy Wilson and the late David Miller spun that original idea into a powerful trade association that listed among its more than 200 members such major multinational corporations as Coca-Cola, General Motors, Chevron and Pfizer. CCA’s influence on U.S. policy toward Africa ranged from the African Growth and Opportunity Act (AGOA) to the U.N. Convention on Desertification. If America’s Africa policy was being discussed, CCA was at the table.

CCA Summits, such as the one beginning today, attract Heads of State and Government, leaders of international financial institutions such as the African Development Bank and titans of commerce in America and Africa. However, the one area CCA had difficulty successfully addressing was the effort to ensure that American small and medium businesses were fully engaged in U.S.-Africa trade. Getting African companies of all sizes to attend CCA conferences, including the biennial summits, has not been a problem, but getting sufficient number of their American counterparts on board has proved to be challenging. Under current President Steve Hayes, CCA has made continuing efforts to bring small and medium American businesses into the fold – from hiring specialists to sponsoring programs such as the South African International Business Linkages program to supporting trade organizations such as the American and African Business Women’s Alliance.

The latest effort for the 2009 CCA Summit involves the Africa Trade Office of the Prince George’s County (Maryland) Economic Development Corporation (PGCEDC). The Africa Trade Office, which manages the Free Trade Zone encompassing the District of Columbia and suburban Maryland and Virginia, brings its recently developed matchmaking process first used at its November 2008 International Economic Summit. ATO’s manager, PGCEDC Vice President Pat Parker-Sawyer brings to this effort her agency’s special software to schedule meetings, its experience in direct video connections between Maryland-based companies and African companies in Tanzania, Senegal and Cameroon and its trade missions.

CCA and other organizations have struggled over the years to facilitate commercial connections between American SMEs and similarly-sized African companies. Large companies, such as the leading energy giants, bring tremendous revenue to African governments with resources in that sector. However, like economies worldwide, it is small and medium business that creates the jobs necessary for economic development and wealth creation. AGOA was created primarily to connect African and American small and medium enterprises, and the U.S. government has gone about as far as it can to make AGOA benefits more broadly accessed. The private sector, largely through CCA and its partners, must now find a way to successfully facilitate this process.

Wasting Africa’s Future

Trafigura Beheer BV, a Dutch oil trading company, has agreed to pay more US$48 million for up to 31,000 Ivorians who claimed to have been made sick by toxic waste dumped in Abidjan three years ago. However, the Toxic Waste Victims’ Association says the cost of medicine for those affected exceeds the settlement amount. Meanwhile, the company denied liability and claims the settlement actually vindicates them since they are covering for the actions of Compagnie Tommy, an Ivorian company.

In whatever way you choose to assign blame, 500 tons of toxic waste sent up fumes of hydrogen sulphide, petroleum distillates and sodium hydroxides across the capital city of Cote d’Ivoire. Several people, including two children, died from these fumes. At least 15,000 others had to seek medical treatment for nausea, vomiting and headaches at clinics specially set up to handle the multitude of those affected. If only this were an isolated case.

Over the past three decades, companies in developed nations have used poor African countries as dumping grounds for toxic waste they could not as easily dispose of in their own homeland. Secret deals sent thousands of tons of raw sewage, sludge, incinerated ashes, contaminated oils, chemical compounds, acids and poisonous solvents into countries such as Angola, Benin, Nigeria and Somalia. Of course, they have often used rural areas unlikely to get the kind of coverage the Abidjan incident did. How many Africans have died or developed long-term illnesses from such dumping? No one can say for sure because neither the dumpers nor the government officials that allowed them to do so cared about the consequences for the average African, or they wouldn’t have used these countries in such a cruel way in the first place.

Sixty years ago, toxic waste production generated five million metric tons annually. By 1988, during the peak of toxic waste dumping in developing countries, more than 300 million tons of toxic waste was generated. Regulations in developed countries require treatment of toxic waste and disposal in highly regulated conditions that cost up to US$3,000 a ton. Developed world companies found willing officials to accept untreated waste for as low as US$5 a ton, presumably even with bribes attached. In the late 1980s, international organizations such as the United Nations Environment Program and the Organization of African Unity began taking action to regulate toxic waste dumping and sanction countries that violated international restrictions on international trading in hazardous waste. Illegal toxic waste dumping in Africa reportedly went down, but unfortunately, whenever times are hard and some officials think they can conclude a secret deal for profit, toxic waste trading has continued. By 2001, the United Nations estimated that 8.5 million tons of toxic waste was exported much of it to African countries. As recently as 2005, Greenpeace reported that an inspection of 18 European ports found that 47% of exported waste was illegal.

So what will happen in the Cote d’Ivoire case? Well we don’t know yet how the money for those who have suffered will be apportioned or how long it will take for them to receive it. We don’t know what standard of proof of injury will be used to determine who gets any of the money or how much money they will get. Nor do we know how the Government of Cote d’Ivoire will use the US$198 million it received from Trafigura Beheer BV or how it intends to protect the interest of Ivorians in this matter. Those are questions that need to be answered for the sake of the Ivorians affected and victims in other developing countries.

Africa’s Population Exploding

Earlier this year, the world’s population surpassed 6.8 billion, months earlier than had been anticipated, and growth shows no sign of slowing down. According to the United Nations Population Division, humanity’s growth actually slowed during the 1990s from 90 million annually to slightly less than 80 million a year. Despite the slowdown, though, predictions of world population growth by the middle of this century range from slightly less than 8 billion to as high as 11 billion people. No where on earth is this growth more rapid than in Africa.

Approximately 13% of the world’s population now lives in Africa, with a population now believed to be in excess of 800 million people. Because so many Africans either live in rural areas difficult to survey or in urban areas without adequate statistical coverage, exact numbers or even estimates are questionable. Moreover, millions of Africans live as displaced persons in their own countries or as refugees in neighboring countries. Africa’s population continues to grow – despite war and civil unrest, famine and pestilence (HIV-AIDS particularly). An estimated 95% of global population growth is in Africa and Asia, regions that already contain more than three-quarters of the world’s population, and Africa itself is seen as expanding to 1.8 billion by 2050.

Currently, only seven African nations are among the 30 top populations in the world: Nigeria, Ethiopia, Egypt, the Democratic Republic of Congo, South Africa, Sudan and Tanzania. By 2050, nine African nations are expected to be in the top 30: Ethiopia (exploding from number two to number one), Nigeria, the Democratic Republic of Congo, Uganda, Egypt, Sudan, Tanzania, Kenya and Madagascar. Kenya and Ghana have led the way in sex education, contraceptive distribution and other population control efforts, and they have slowed their respective population growth, but with a fertility rate of 38 births per 1,000 people and a mortality rate of only 14 deaths per 1,000, Kenya, Ghana and the other African nations continue to grow despite all man-made and natural impediments to population growth.

If you think this is good news that Africa is surviving and increasing its population against all odds, you have to ask yourself is this really what Africans and their friends want at this pointing history? The continent is unable to feed itself and otherwise provide for the needs of its people now, and with tropical forests being depleted, animal species being systematically eliminated, deserts encroaching on arable land and pollution increasing as urban centers continually expand, a rapidly rising population is definitely not good news for Africa.

Each African country must get serious about estimating what the reasonable rate of population growth is for its own ability to sustain its citizens and enact measures accordingly. That means centuries-old traditions about family life must be reexamined to determine what is reasonable for a 21st century in which growth has its limits if viable lifestyles are to be maintained. Donors, especially the United States, must resolve disputes over contraceptive use; it is not only for HIV-AIDS control, but also is necessary part of population control. The crises we now see can and will be much worse if we don’t jointly act to devise reasonable, ethical means of controlling Africa’s population. African fertility spawned the human race, and if unimpeded, it continues to overcome all obstacles. Still, uncontrolled growth is no longer a blessing; it has become a curse.

Africa Holds the Key to Unlocking Doha Round

Since its formation in 1995, the World Trade Organization (WTO) has conducted five ministerial conferences that commenced rounds of trade negotiations. The most recent one, held in Doha, Qatar in 2001, was declared the development round because of its focus on ensuring that the multilateral trade system should benefit developing countries, which constitute more than three quarters of WTO members. Since the surprising strength of the street protests against globalization at the Seattle ministerial in 1999, the 38-member Africa bloc has been more aware of its power to halt the preferred consensus decision-making of the WTO.

The two main areas of focus in the Doha Round have been agriculture and trade in services. The failure to acknowledge that the members of the WTO have vastly different economic systems has prevented consensus on action to conclude the Doha Round. For example, a 2005 Carnegie Endowment for International Peace report showed that agricultural liberalization alone would favor developed countries rather than developing countries that would benefit most from liberalization of manufactured goods. The non-competitive agricultural sectors in many developing countries are based on low-productivity, small-scale farming. Such countries would see lower food costs by importing from more efficient foreign producers, but would also see big losses in their own agricultural sectors.

Because the economies of the United States and Malawi, for example, are structured and operate so vastly differently, it would be difficult to come up with a plan that benefits both without special measure for the weaker economies. And there lies the rub. Special Safeguard Mechanisms (SSMs) have been suggested to benefit developing countries by guaranteeing the right of these more vulnerable economies to exempt staples such as maize, rice and wheat from WTO-mandated tariff cuts and permit them to raise tariffs in the case of large or sudden increases in imports that threaten domestic producers. One of the shutdowns of the Doha Round occurred in 2008 when the United States refused to accept the SSMs.

But now the Government of South Africa is participating in the next Doha Round negotiations next year as the champion of the developing bloc of countries. South Africa has pledged to work with other emerging and developing nations to ensure a balance between agriculture negotiations and demands for industrial tariff reductions. South Africa has formed an alliance with the governments of Australia, Indonesia and the Republic of Korea to seek a conclusion to trade negotiations in this WTO round in 2010. South African President Jacob Zuma pledged just that in his State of the Nation address.

African representatives have used their status as the largest regional WTO bloc to stymie action, but with South African leadership, perhaps now those votes can be used to achieve African and other developing economy goals and fulfill the promise of the development round of trade negotiations.

A Ray of Hope in Cote d’Ivoire

After its independence from France in 1960, Côte d’Ivoire (also known as Ivory Coast), became the model of stability in Africa and featured a major African economy. It still is the world’s leading cocoa producer, exporting nearly twice as much as Ghana, the number two cocoa producer. Before relatively recent United Nations sanctions, Côte d’Ivoire was an exporter of diamonds. Since the death of its legendary leader Félix Houphouët-Boigny in 1993, this Africa exemplar has been in decline. However, the recent announcement of progress on new elections provides hope that there could be a turnaround in a nation plagued by civil war, ethnic strife and nearly constant violence.

After Houphouët-Boigny’s death Henri Bédié, then the National Assembly President, succeeded him after a brief power struggle with then-Prime Minister Alassane Outtara. In the 1995 elections, Bédié’s government changed the electoral law so that Ouattara was banned from competing, and his party boycotted the elections, which were then won by Bédié. Due to allegations of corruption and political repression, Bédié was eventually overthrown in 1999 by retired General Robert Guéï, who as himself overthrown in a popular uprising the following year. He was succeeded by Laurent Gbagbo who won the 2000 election, and remains President.

Throughout the succession of coups and manipulated elections since 1993, there has been one constant: Bédié, Guéï and Gbagbo all played the ethnic and religious cards to prevent Outtara from even attempting to win the presidency through elections. The result of their efforts has also been the cleavage of the country, and since 2002, a civil war that has split the country between the north controlled by rebels and the south controlled by the government. A border area between the two regions is patrolled by French and other international peacekeeping forces.

Despite continued efforts to restore the peace and form governments of national unity, violence, assassination attempts and attempted coups persist. Meanwhile, there have been several postponements of presidential elections since Gbagbo’s mandate was initially extended in 2005. Now the UN envoy to Côte d’Ivoire, Y.J. Choi, has said that voter registration for the planned November 2009 presidential election is going well. According to registration figures, more than six million voters – about 70% of the eligible voters – have been registered.

Côte d’Ivoire remains a major U.S. trading partner. Despite the civil war and almost constant violence, Côte d’Ivoire is number eight among Africa trading partners with the U.S. The country’s continued economic influence has been a major factor in the patience the international community has shown for the conduct of elections over the last four years, but patience must finally run out. There does not appear to be further forbearance for election postponements in this West African nation, and if Côte d’Ivoire is to return to its former station as a bulwark of stability in Africa, this election must be held on time and in proper accord.

Getting Serious on Climate Change

For the first time, the countries of Africa are sending the signal that they are serious about combating the impact of climate change and stand together in challenging developing countries to do more about a problem Africa did little to cause but which negatively affects it perhaps more than any other region. Africa will field a single negotiating team at the 15th Conference of Parties to the United Nations Framework Convention on Climate Change in Copenhagen, Denmark, from December 7-18.

The Africa team, headed by Ethiopian Prime Minister Meles Zenawi, sent a shot across the bow to the developed world, warning that African nations will no longer be sidelined by their inability to speak with one voice and will no longer stand for being marginalized. “We will use our numbers to delegitimize any agreement that is not consistent with our minimal position,” Zenawi said. “If need be, we are prepared to walk out of any negotiations that threaten to be another rape of our continent.”

Indeed, the Africans must wage a strong battle for their future on climate change. The continent suffers from various climate-caused ills, including deforestation, desertification, erosion of coastlines, loss of soil fertility, rising air pollution, water pollution and drought. Some of these ills are exacerbated by human actions that African themselves must address, such as crop rotation to maintain soil quality and effective waste disposal to prevent water pollution from sewage. However, the lack of effective technology transfer makes combating air pollution more difficult for African governments, and global climate change trends are the cause of desertification and coastal erosion.

There continues to be a vigorous debate about the impact humans have in climate change. Still, when one examines the record on carbon emissions, the contribution of Africa as a whole to global carbon emissions is miniscule. China is the world leader is total carbon emissions with more than 6 billion metric tons of carbon dioxide annually, followed by the United States, the former leader, at 5.9 billion metric tons. The closest African nation in carbon emissions is South Africa, with 443 million metric tons. Egypt is second with 151.6 million metric tons. Only Nigeria tops 100 metric tons (101 metric tons). Most of the rest of the Africa countries produce less than 50 million metric tons of carbon dioxide annually. Africa’s total carbon emissions just about equal that of the state of Texas.

While climate change may not be completely of their making, African governments must contribute to combating its affects and not depend solely on developed governments and international financial institutions to save the day. The majority of African countries are dependent on rain-fed agricultural production. Consequently, it is imperative that Africa must guarantee its own survival through international negotiations and internal action to break the drought-flood trends that currently plague regions such as East Africa, as well as the longer term effect of climate change.

China the Mineral King

African nations have long been recognized as the source of abundant minerals on which our modern society relies. Nearly 80 percent of the strategic minerals we need originate in Africa. An estimated 97 percent of the world’s platinum is from Africa, as well as 90 percent of the cobalt, 80 percent of the chromium, 64 percent of the manganese, half the world’s gold reserves and as much as a third of all uranium. In recent years, the mineral coltan (columbite-tantalite), largely coming from Africa, has enabled the development of computers, cell phones and other electronic devices. We would be hard-pressed to construct jet aircraft, automobile catalytic converters or iPods without the minerals found in Africa, and in some cases, almost nowhere else in the world. And this is not even taking into account oil and natural gas from African producers, who are steadily gaining a global market share.

However, China, which has increasingly attempted to lock up much of the supply of strategic minerals from African countries, is now the leading producer of what are known as rare earth elements or rare earth metals. These are 17 chemical elements in the periodic table, which are used in various technological devices, such as superconductors, electronic polishers, refining catalysts and hybrid car components. As time goes on, these minerals will increase in importance in the 21st century economy.

As it happens, South Africa used to be the world’s leading source for these minerals. South Africa still produces some rare earth concentrates, but its production is dwarfed by what China produces, which now represents 95% of rare earth supplies. Chinese production often releases toxic wastes into the general water supply, and that would tend to discourage increased South African production absent what could be expensive environmental safeguards.

Yet another issue tends to discourage South Africa or other foreign attempts to compete with Chinese rare earth production. China has instituted export quotas to limit the amount of rare earths sent abroad. This has shifted the knowledge base since companies like General Motors are now forced to move staff and production facilities to China. Thus, most of the research and extraction expertise is flowing to China and not South Africa or other rare earth producers.

These developments make it all the more important for Africa to maintain control over what rare earths it does produce, as well as the strategic minerals it currently produces and any future discoveries of new vital mineral products. Along with its current stranglehold over rare earths, Chinese monopoly over supplies of African strategic minerals would be an alarming development – not only for Africa, but for the global marketplace as well.