US's free trade agreement for growth in Africa

Published: Saturday 15 July 2006

-- (Credit: Shyamal)The us recently called for a free-trade agreement with 37 African countries, saying it will fuel economic growth in Africa.

us officials proposed this in Washington on June 9, 2006, at the fifth meeting of the African Growth and Opportunity Act (agoa), a trade forum involving African nations and the us, which was started in 2000.

African nations are not, however, very keen on the agreement because a free-trade agreement could undermine their economies given the prevailing terms of trade.

The us is keen on upgrading the scope of agoa, which is trumpeted as a goodwill gesture by the us because it allows duty-free access to more than 6,400 commodities, including textile products, into the us market for 37 of 48 sub-Saharan African nations. Ninety-eight per cent of all us imports from agoa nations were duty-free in 2005. But the preamble of agoa also asks for a gradual evolution to a free-trade situation, if such benefits are to continue. This arm-twisting may ultimately clear the path for the us 's business interests in the African continent.

us -Africa trade increased by 115 per cent in 2005, powered mostly by a spike in crude oil prices. Total non-oil trade under agoa, however, declined in 2005 by 16 per cent. The us says the balance must shift away from fuel.

The us secretary of state, Condoleezza Rice says, "Progress against rampant African poverty is only likely through business-led growth." She argued that in most African countries, governments still stifle private business with red-tape and high fees.

In the face of opposition from African nations, us officials are trying to create a free-trade environment through bilateral treaties with individual nations, like the trade and investment framework agreements that traditionally precede free-trade pacts. The us recently signed such an agreement with the Rwandan government.

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