Aware of instability issues, US unveils trade initiative aimed at Africa
- J Brooks Spector
- 29 Nov 2012 12:42 (South Africa)
Acting American Commerce Secretary Rebecca Blank, a politically attuned labour economist and veteran senior official, is in the midst of a quick Africa tour designed to punt new trade initiatives to get the US back into the trade and export game in Africa. Of course, that will be in competition with nations like China that have had a pretty good run over the last few years in Africa. By J BROOKS SPECTOR.
All of this, and from the Commerce Department? This is, after all, the department that sometimes seems to be a kind of black hole for impact. In recent years, Commerce has sometimes been bureaucratically outplayed in high-stakes economic policy influence by more agile Washington actors like the US Trade Representative’s office and the Treasury Department. Also competing for influence, a wide array of other agencies like the Export-Import Bank, OPIC (Overseas Private Investment Corporation), the SEC (Securities and Exchange Commission), and even the SBA (Small Business Administration) all have chunks of influence and authority in economic and related policies. Even the State Department keeps trying to hold some power on international trade and economic issues, despite the fact that it handed off the Foreign Commercial Service to the Commerce Department over a generation ago. Part of the problem for American international commercial and business promotion policy – and why it sometimes seems to flaccid – has been this wide spread of authority across jurisdictional borders.
In fact, most Americans – if asked what the Commerce Department did – would probably blink uncomprehendingly, even though they would certainly understand the role of the National Oceanic and Atmospheric Administration (aka the Weather Bureau), the Census Bureau, the Patent and Trademarks Office, and the National Institute of Standards and Technology (equivalent to the SABS). But Commerce, as a cabinet department, just hasn’t been a very sexy one over the years.
However, in the past year or so, the Obama administration seems to have become increasingly intrigued by how this might change. There has been interest in bringing together many of the country’s international economic policy agencies into one super-office to give the US a kind of rough equivalent for a Department of International Trade and Industry that could go toe-to-toe with its international equivalents in trade negotiations and disputes.
Here in Africa, the wider world is beginning to catch on to the notion that this is an increasingly economically vibrant continent – rather than the hopeless one portrayed in publications like The Economist a decade earlier. Africa has a young population and it now includes six of the top ten fastest-growing economies in the world. And these countries also have a nascent, growing middle class – or at least aspirant middle class consumers who want the top brands as well as much better services from their governments. Not surprisingly, visits by foreign trade delegations, strategic economic dialogues and bilateral partnerships are springing up in the bigger economies like those quick-blooming desert flowers after a rainstorm.
Even though the Obama administration has been touting publicly the primacy of its economic and security pivot towards East Asia – and away from those inherited entanglements in Afghanistan (or Iraq before that), it is looking towards Africa as a big potential market for sales of consumer and capital goods. In fact, the Obama White House – in its fourth year – issued a new strategy for Africa that puts trade and growth right near the top of the agenda. Even ahead of combating transnational terrorist activity or encouraging regional stability – and right up there with promotion of democracy and the rule of law.
As Obama has said recently about this new exposition of its continental policy shift, “Sub-Saharan Africa is a region of extraordinary opportunity for growth and economic development. That is why this June, I issued the US Strategy Toward Sub-Saharan Africa, a plan aimed at strengthening democratic institutions; spurring economic growth, trade, and investment; advancing peace and security; and promoting opportunity and development in the region.”
And so that put Acting Secretary Rebecca Blank on the road to Kenya and South Africa, to push trade initiatives. On Wednesday, she spoke to a lunchtime gathering of Business Unity South Africa in Johannesburg, saying that this strategy “commits the US to elevating our efforts to spur economic growth, trade and investment.” The key elements to this approach are supporting a business climate that promotes trade and investment; encouraging better integration and transparency of African markets to nurture economies of scale; nurturing African companies’ ability to access global markets and participate in the increasingly global supply chain network; and promoting Africa as a destination for American investment and trade.
According to Blank, there are two key elements underpinning this initiative. The first is continued access to the African Growth and Opportunity Act. She said that by contrast to the pre-AGOA period, African non-petroleum exports to the US have tripled to nearly $5 billion; and over twice the number of eligible African nations are now shipping non-commodity goods under this system compared to that earlier period. Moving away from the abstract, Blank described how one black, female-owned South African company has now been able to link into the Walmart/Massmart supply chain. That’s revenue and jobs. And the renewal of the third-country fabric provision a few months back will also help support clothing manufacturing in all those less-developed Sub-Saharan African nations, according to Blank.
The second key element is the Obama administration’s “National Export Initiative”. The goal of this effort is to double the total value of American exports between 2009 and 2014 – tapping into that growing African consumer base and its presumed hunger for all those made-in-America products. According to the stats, US-Sub-Saharan Africa trade has now reached the total of $95 billion (counting both imports and exports), up 16% over 2010’s figures. While these are impressive numbers, the actual extent of US-Africa trade is still only about 2.6% of US total trade with the world, so there is clearly some room for expansion.
Blank then used her BUSA speech to announce another new initiative to make Commerce even more relevant – the “Doing Business in Africa Campaign”. One part of this project will be to make American businesses more aware of African trade and investment (and profit) opportunities on the continent. There will be better financing opportunities to support American exports, trade counselling and professional advocacy for entrepreneurs – and an effort to tap into the energy and enthusiasm of those in the African Diaspora.
To breathe life into this initiative, Blank said American commercial officers would now be tasked to provide special counseling on starting or expanding export efforts in Africa – including supplying information about new business opportunities on the continent. Drawing on the reach of that African Diaspora, they will now build on the power of person-to-person relationships.
This “Doing Business in Africa” effort is also going to gain some financial backbone from that alphabet soup of trade promotion agencies that already exists – OPIC, USTDA (the US Trade Development Agency), and Ex-Im – to establish a new US-Africa Clean Energy Development and Finance Center. There’s gold in that demand for energy. Blank said that this centre – based in Johannesburg – would be charged with implementing clean energy projects throughout Sub-Saharan Africa and would promote US private-sector participation as this sector with technical and financial support for solar, wind, biomass, geothermal, hydro, ocean and natural gas projects.
Inevitably, too, she was in South Africa with representatives from over a dozen companies such as construction and agricultural equipment manufacturers, well-water treatment companies and high-tech enterprises integrating GPS data with wireless communications.
After painting this glittering picture of these future trade opportunities, Blank responded to media questions about stumbling blocks on this road. She was asked, for example, about the impact of those awkward allegations of corruption by MTN in its ties to Iran (no comment). Then there was question of whether South Africa’s season of strikes would negatively affect US trade and investment in the country (Yes, labour instability undermines a sense of stability and that naturally affects investment decisions.) Yet another query was about the investment climate in East Africa, given the developments in the Eastern Congo.
And perhaps inevitably, too, some wanted Blank to speculate on whether Barack Obama would spend more than a day in Africa – as he did in Ghana a few years back – in his next term. Blank expected more attention to Africa by Obama in the future – but she doesn’t write his travel schedule.
But throughout the day, that familiar 500kg panda was also in the room. As questioning turned to how America would – or could – compete against nations like China in taking advantage of South Africa’s impending infrastructure spending in energy and transportation, Blank insisted there was enough demand on the continent for everyone, and that American products – with their reputations, reliability and long-term support by their sellers – would find their rightful places in the market as once these new trade support initiatives begin to kick in. We’ll know soon enough. DM
Photo: Rebecca M. Blank, Acting Secretary of Commerce and Deputy Secretary of Commerce (commerce.gov)
- J Brooks Spector