US calls on Africa to lower cost of exporting goods !

Fooman

•Michael Froman, the US Trade Representative, said African countries needed to integrate their economies and lower cost of getting goods to international markets to make impact in global trade.

By George Omondi

US officials wants African governments to invest in infrastructure and lower custom restrictions to boost intra-regional trade as they ponder the future of the preferential trade window with the United States.

Michael Froman, the US Trade Representative, said African countries needed to integrate their economies and lower cost of getting goods to international markets to make impact in global trade.

“It’s very expensive to get Africa’s goods to global markets,” Mr Froman told journalists Tuesday via a conference call from Addis Ababa.

“Africa also needs to strengthen its regional integration and possibly build a continent-wide free trade area,” he said.

Mr Froman led the US delegation to a meeting with trade ministers and investors from 39 African countries during the African Growth and Opportunity Act (Agoa) forum which ended Tuesday.

The comments came just weeks after Mr Froman indicated that the US might ask African states to reciprocate the duty and quota-free Agoa by opening up their markets the same way they do to Asia and Europe. At the moment, Agoa allows African countries to export more than 4,000 product lines to the US without quota or duty restriction.

READ: US seeks reciprocity in new Agoa trade deal

“Obviously, there’s going to be a lot of scepticism in the US if African countries ask for extension of Agoa beyond 2015 unless they also offer to give same preferential treatment to American goods,” Mr Froman said.

For Kenya, the comments put the future of the labour-intensive Export Processing Zones (EPZ) at stake. EPZ firms rely heavily on Agoa to keep more than 30,000 people on payroll.

Only last year, Kenya’s textile firms shed 1,258 jobs and Sh647 million in capital investment in the anxiety that ensued after the US government delayed in extending the third country fabric rule. The rule allows local firms to produce US-bound exports from imported raw materials and semi-processed fabrics.

ALSO READ: Textile firms resume investments after Agoa rule extension

The Economic Survey 2013 shows that the number of workers at garment and apparel segments of the EPZ dropped by 5.4 per cent to 23,811 in 2012 compared to 25,169 the previous year.

Similarly, the level of capital investment shrunk by 9.4 per cent from Sh6.9 billion in 2011 to Sh6.2 billion last year as risk-averse investors worried over the future of Agoa. Kenyan investors have been pushing for the Agoa to be made permanent to attract long term investments.

omondi@ke.nationmedia.com

http://www.theeastafrican.co.ke/business/US-calls-on-Africa-to-lower-cost-of-exporting-goods-/-/2560/1946992/-/15q45jp/-/index.html

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