US keeps eye on European competition for African trade

The US is keeping a close watch on potential European trade deals with African nations as Washington reviews its own preferential trade initiative with the continent. African ministers and US officials discussed trade relations at a forum on Monday in the Ethiopian capital Addis Ababa.

The US is considering an extension to the popular  African Growth and Opportunity Act (AGOA) an American law that allows sub-Saharan African countries to export certain products to the US duty free.

First signed into law in 2000, the act has already been renewed once, and is set to expire in 2015.

US Trade Representative Michael Froman has been meeting with African ministers at an AGOA forum in Addis Ababa to work through the details of a new deal.

In a conference call with reporters on Monday, Froman said one of the big questions is about the impact of African trade talks with the European Union (EU).

“I do think there is a challenging issue before the African partner countries about how to work with us on the renewal of AGOA and how it relates to the negotiations that are ongoing with the European Union for economic partnership agreements,” he said.

Unlike AGOA, the EU economic partnership agreements would see African nations reciprocate the benefits of duty-free trade by allowing preferential treatment for European imports into African markets.

While the American act only covers exports to the US, and should not be confused with a free trade agreement, Froman said questions will be raised in Washington about how American companies will benefit if the law is extended.

“I imagine there will be significant scepticism in the US that we should allow one-way access to our market if our firms are being put at a disadvantage,” Froman said.

Ultimately, it is the US Congress that will decide whether to approve an extension of the law, and for what period of time.

To qualify for AGOA benefits, eligible countries are supposed to demonstrate they are working to improve rule of law and human rights, and are setting labour standards. Currently, 39 countries are eligible.

In 2012, trade between AGOA countries and the US was worth about US$67bn, most of it in the form of oil and natural gas exports to the US. – VOA