Saturday, August 4, 2012

US raises stakes in Africa to cut back China’s trade influence

By MUTHOKI MUMO [email protected]

America has turned its focus on Africa amid concerns that China’s growing influence on the continent could undermine Washington’s.

This move is embodied in a strategy first elaborated by President Barack Obama in June.

The four-point plan lays emphasis on strengthening democratic institutions; spurring economic growth and trade; advancing peace and security and promoting development.

Currently, US Secretary of State Hillary Clinton is on an 11-day tour of the continent to raise interest in security, sustainable partnerships and investment.

“Indeed, we believe that if you want to make a good investment in the midst of what is still a very difficult global economy, go to Africa,” she told a Senegalese audience last Wednesday.

Mrs Clinton arrived in Nairobi on Saturday for talks with President Kibaki, Prime Minister Raila Odinga and Somali President Sheikh Sharif Sheikh Ahmed.

Clinton’s comments in Senegal that America would stand up for democracy in its pursuit of economic interests were interpreted as a swipe at China. Beijing has been accused of partnering with authoritarian African governments in search of resources.

Mrs Clinton’s visit to Kenya comes days after Mr Obama’s deputy national security adviser for international economic affairs, Mr Michael Froman, held talks with officials in Nigeria and Kenya.

Last Tuesday, he spoke enthusiastically in Washingon about a policy shift from aid to facilitating trade.

“If there is one way to summarise the change, it is that the focus has shifted from how much aid will be provided to how best to create the enabling environment for the trade and investment to drive broad-based economic growth,” he said.

Over the last decade, trade between the US and Africa has increased by 300 per cent to $95 billion in 2011 largely due to provisions of the African Growth Opportunity Act (AGOA).

Earlier this year, the US Congress extended until 2015 a rule on third-party inputs that will make it easier for players in Africa’s textile industry to export to the United States.

On the other hand, trade between Africa and China reached $166 billion in 2011 from $10 billion in 2000.

Last month, Chinese premier Hu Jintao pledged $20 billion to support infrastructure growth in Africa during the fifth forum on China-Africa Cooperation (FOCAC).

Regional integration is a crucial part of this increased focus on Africa.

Last month, the US International Trade Commission completed a study on trade facilitation in the East African Community (EAC) highlighting non-tariff barriers and lack of infrastructure as the main challenges to operating businesses.

Investment pact

Furthermore, US and EAC officials began their first round of talks on a new US-EAC trade investment pact on July 26.

“Europe is developing a pact with the EAC. China has also expressed interest in a trade agreement. The Americans do not want to be left out,” said Mr Richard Sindiga, director of economic affairs at the ministry of the EAC.

According to Mr Froman, Washington will be seeking “fair and equal” treatment of investors as part of its dealings.

These statements have raised concerns that the US may seek a most-favoured-nation (MFN) clause in the trade pact.

Countries securing this status cannot be discriminated against in trade agreements.

This means that if EAC states decide to grant duty or tax waivers to one of the MFN countries, they have to do the same for the rest.

“We are yet to define what we want from the pact. No one is talking of MFN clauses yet, but if they do, we will not stand for it,” Mr Sindiga said.

The motivation behind America’s increased presence on the continent may be lost in the diplomatic speak used by officials visiting Africa.

However, in the halls of Washington, the message is blunt.

A bill has been introduced in the US Senate urging the government to develop concrete policies to improve exports to Africa and expressing concerns over China’s role on the continent.

“This bill lets us establish a plan that will allow us to compete with nations like China that are already extremely active in the African markets,” said Senator John Boozman, a Republican member of the Senate committee on commerce in an Internet post.

The Increasing American Jobs through Greater Exports to Africa Act is a bipartisan bill sponsored by two Democrats, Richard Durban and Chris Coons, and Mr Boozman, who want the US government to shift its focus from idealistic development goals to tangible investments.