Africa Trade Act Helps Liberalize Continent’s Economies

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Reforms, advances in Ghana highlight promise of partnership with 38 nations

09 July 2007 -- Washington -– Strengthening the partnership for economic reforms and development between the United States and 38 African nations is the aim of the sixth annual African Growth and Opportunity Act (AGOA) Forum.

The forum will be held in Accra, Ghana, July 18-19, and U.S. and African officials said activity under AGOA in the host nation spotlights the goals and potential benefits of the law.

Signed into law in May 2000 by President Clinton, AGOA provides duty-free access to American markets for a range of 6,000 African products. Its aim is to spur export-led growth in nations that agree to liberalize their economies.

President Bush extended trade incentives in revisions to the law in 2002 and 2004, and 38 African nations currently are eligible for its benefits.

The forum is an important part of AGOA, said Todd Moss, deputy assistant secretary of state for African affairs, because "it represents an ongoing dialogue between Africa and the United States to ensure that the benefits of AGOA are realized."

And Ghana, he said, has been in the vanguard of countries that have taken to heart this year's theme, "As Trade Grows, Africa Prospers: Optimizing Benefits under AGOA."

As an early partner in the program, the West African nation was able to take advantage of AGOA's favorable trade benefits, in part, because of macroeconomic and financial reforms undertaken by Ghanaian President John Kufuor, Moss said.

The country is now home to one of four "trade hubs" in Africa operated by the U.S. Agency for International Development as a one-stop shopping center for information on AGOA.

Moss will join other officials, trade experts and business executives at the forum in offering tips and advice on how to gain access to American markets.

U.S. Agriculture Secretary Mike Johanns is expected to deliver a keynote address on agricultural trade development under AGOA. The forum also will include a meeting of finance, economic and trade ministers as well as separate sessions hosted by civil society and business groups.

Moss said that AGOA -- the first U.S. trade legislation aimed at sub-Saharan Africa -- shows the United States "has made Africa one of its priority regions," adding that, as a result, "relations with the continent are as strong as they have ever been."

"At no other time in the last 50 years has interdependence between Africa and America been greater," and AGOA plays an important role in that dynamic, Moss said.

Since AGOA’s implementation in 2001, non-oil exports to the United States from Africa under the program have grown on average 18.7 percent annually, he said. "This is the type of economic momentum that we want to keep going, with the aid of experience and knowledge shared at the upcoming Accra forum," he added.

The forum host, Ghana, “in particular is a key partner of the United States, and it's not just on trade but on a whole range of issues, from peace and security to governance and economic growth," he said.

President Bush made that point when he hosted President Kufuor at an April 2006 White House meeting.

"President Kufuor has done a fantastic job for Ghana," Bush said. "He's told the people of his country he'd bring honesty to government, and he has. He told the people of his country that he would work to create a stable economic platform for [development], and he has done that as well."

Ghana exported $43 million in goods to the United States under AGOA in 2006, representing 24 percent of the country's total U.S. exports for that year, according to the AGOA 2007 report of the U.S. trade representative (USTR).

USTR said Ghana has "a market-based economy with few barriers to trade and investment," adding that sound macroeconomic policies and debt relief have resulted in declining inflation and interest rates, a stable currency and real economic growth averaging 5 percent to 6 percent yearly.

The World Bank's recent Doing Business in 2007 Report also praised Ghana for its economic reforms and improvements in the business climate.

Ghanaian Ambassador Kwame Bawuah-Edusei said that as the first African nation to achieve independence from colonialism 50 years ago, "Ghana led Africa in political emancipation.” Through AGOA, he added, "we're leading Africa in economic emancipation."

"Under the leadership of President Kufuor we have had a paradigm shift in our economic and political thinking, leading to a much more investor-friendly atmosphere, and now our nation is open for business," Bawuah-Edusei said.

Bawuah-Edusei said that Ghana began a range of financial and regulatory reforms, as well as infrastructure improvements, aimed at eliminating supply-side constraints to the economy that had hindered growth in the past. But trade constraints still remain, especially in the areas of storage, transportation and port services.

However, he said, recent deals like the $1 billion investment in Ghana by the Denver-based Newmont Mining Company, offshore oil finds and now direct New York to Accra flights by Atlanta-based Delta Airlines are indicators that Ghana is moving in the right direction.

Small and medium-sized enterprises in areas like textiles, agricultural product processing and information technology assistance also “are very much active in Ghana, and we hope more will follow through," he said.

Source: US State Dept.