Sunday, October 19, 2008

US signs trade and investment agreements with SACU, EAC

Corey, Charles W; (Washington, DC) 2008-07-18

Two important trade and investment agreements which will further deepen and expand US trade ties with Africa were signed this week by United States Trade Representative Susan Schwab and her counterparts from east and southern Africa.

One of the agreements marks the first Trade, Investment and Development Cooperative Agreement (TIDCA) with the Southern African Customs Union (SACU).

Schwab participated in the signing with SACU trade ministers from Botswana, Lesotho, Namibia, South Africa, and Swaziland in Washington while attending the seventh annual African Growth and Opportunity Act (AGOA) forum which was held there from 14 to 16 July.

“This important agreement will provide a framework for the United States and SACU to work together to create the building blocks that could lead to a free trade agreement (FTA) in the long term”, Schwab told the ministers, business executives, and diplomats in attendance at the meeting.

“Before we address the issues of an FTA, we are using the new TIDCA to expand market access, strengthen the links between trade and economic development strategies, encourage greater foreign investment and promote regional economic integration and growth”, she said.

The TIDCA will be a formal mechanism for the US and SACU to conclude a range of trade-related agreements, cooperative work, and other trade-enhancing initiatives. It will also allow the two regions to develop work plans on key issues including food safety standards and technical barriers to trade and investment promotion which should lead to increased US-SACU trade and investment in the near future.

Speaking on behalf of SACU, Executive Secretary Tswelopele C. Moremi said that the agreement is “an important step in reaching a long-term and sustainable trade relationship” between the African trade bloc and the United States which will improve investment flows on both sides.

Similarly, Lesotho’s Minister of Trade and Industry Popane Lebesa called the signing an “important milestone” that puts trade and investment on a stable platform for further development.

FTA negotiations were launched by the US and SACU in 2003, but talks were suspended in April 2006 due in large part to differing views on the scope of the agreement. In November 2006, the US and SACU agreed to pursue a new type of agreement – a TIDCA – that could enhance the trade and investment relationship between them in the short term and help lead them to a possible FTA in the longer term.

SACU is the largest non-oil trading partner in sub-Saharan Africa for the US, where bilateral trade reached $15.8 billion in 2007. SACU is also the largest beneficiary of the AGOA, with imports from the US valued at $2.9 billion including a wide range of goods such as automobiles, minerals and metals, diamonds, agricultural products, textiles, apparel, footwear, chemicals, and transportation equipment.

Schwab signed a Trade and Investment Framework Agreement (TIFA) simultaneously, aimed at deepening US economic engagement with the East African Community (EAC).

“The EAC is one of the leading regional economic organisations in sub-Saharan Africa”, she said. “It is making significant progress in opening up regional trade and advancing economic integration among its members. We see the TIFA as a major step toward deepening the US-EAC trade and investment relationship, expanding and diversifying bilateral trade, and improving the climate for business between US and East African firms.”

The agreement was signed by Peter Kiguta, EAC Director-General for Customs and Trade, on behalf of the EAC. Witnessing the signing were trade ministers and other senior officials from EAC member states Burundi, Kenya, Rwanda, Tanzania and Uganda. He told his audience that the signing marks “a momentous occasion” and will play “a groundbreaking role” in advancing trade relations between the US and EAC.

Also speaking for the EAC was Vincent Karega, Rwanda’s Minister of State, Trade and Industry, who said that the EAC agreement sends a strong message of business partnership. He pledged that member states will continue to reform their economies to further improve trade and investment.

The TIFA will establish regular, high-level discussions on the full spectrum of US-EAC trade and investment topics including the AGOA, the World Trade Organisation’s (WTO’s) Doha round of trade negotiations, trade facilitation issues, and trade capacity-building assistance.

The EAC was established by Kenya, Tanzania and Uganda in 1999, and Burundi and Rwanda joined in 2007. The bloc has established a free trade area and customs union among its members and is currently working towards a common market.

Bilateral trade between the US and EAC exceeded $1.2 billion last year, where US imports from EAC members under AGOA and the Generalised System of Preferences (GSP) were recorded at $265 million for the same period. All five EAC member countries are eligible for trade benefits under AGOA.