My take on the speech, and hence the general direction of the emerging Obama administration’s Africa trade-related policy is briefly this:
There are two main broad principles that seem to emerge from the Clinton Kenya speech, and before that, the Obama Ghana speech. The first is that the future of Africa is in African hands. Obama said it more directly; Clinton talked of U.S.’s belief in Africa’s promise, Africa’s potential, Africa’s opportunity. The second principle is that U.S. approach will be a partnership based approach as opposed to a patron approach. Of particular, interest is the harping that is going on about U.S. assistance and making sure that most of the money does not in fact stay in the U.S. through salaries to Americans or consultants and contractors. Both these are useful first principles but will they translate into meaningful policy changes? Only time will tell.
AGOA has Underperformed but it Remains the Main Trade Framework
There is clear consensus that AGOA has underperformed and Clinton admitted as much. So have others in the U.S., such as the U.S. Trade Representative, Ron Kirk. I have joined this consensus in my earlier post on this AGOA Forum. The main worry that arises for me is that the Obama administration’s policy here is to maintain the same framework and hope that the full potential will come to pass with better supply-side capacity.
While there might be a case to be made to do more to increase the benefits of AGOA, there is need to recognise the critical systemic problems, outlined in my earlier post, which require to be addressed. As long as the level of diversification remains low and the benefits go to a few countries and few people, then AGOA cannot be the best framework to guide U.S. - Africa trade policy.
Related to this, one needs to ask why the unilateral approach to general trade on the one hand and bilateral investment agreements with respect to investment on the other. In her speech Clinton emphasises that the U.S. will work to expand the number of bilateral investment agreements (BITS) in Africa. The policy and agreements on investment might be even more important to watch than AGOA. Their implications for African economies are significant.
Africa’s Green Revolution & Diversification: Where do they meet?
Reading Clinton’s speech and Obama’s Ghana speech leaves the clear impression that agriculture and the idea of Africa’s green revolution will be a big chunk of the Obama’s administration focus in Africa. I have argued previously that the general approach to agriculture makes sense but looking at the details as they emerge some questions marks start to come up. A couple to mention:
* In the context of trade, how do you reconcile the emphasis on agriculture and food exports with the equal emphasis, especially in Obama’s Ghana speech, on value-addition and diversification? Will Africa end up being simply seen as the world’s farmland?
* Technology is a key feature of the emerging policy. What will be the approach of the Obama administration with respect to intellectual property (IP) rights management in agriculture?
At the beginning of the 8th AGOA Forum, the Kenyan Prime Minister, Raila Odinga, was quoted as having told off the U.S. Ambassador to Kenya regarding too many lectures on governance. He argued that Africa does not need lectures on governance but on how to benefit from trade. I don’t think that Africa needs lectures on trade either.
That said, the sensitivity of the Kenyan government, which is dealing with major local governance problems seems to have given the impression that general governance is a key part of the U.S. trade policy in Africa. In fact, a careful reading of the Clinton speech does not suggest this. The emphasis on governance, at least in the trade context, seems to be rather narrowly focused on investment climate. The issues there are of interest to any investor, trader or businessman. So for those hoping AGOA et al may be a place for broader governance debate they may be disappointed.
By Sisule F. Musungu
First published in IQsensato's Ideas in Development Blog