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Note: This document is from the archive of the Africa Policy E-Journal, published by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived document may not work.

Africa: US Trade Report, 2
Date Distributed (ymd): 970301
Document reposted by APIC

The second annual report of the United States Trade Representative on Africa trade and development policy was released on February 20. The full text is available on the Web at: http://www.ustr.gov/reports/africa/1997/index.html

This posting contains the report's summary of new administration initiatives. The previous posting contains the executive summary of the report.

A COMPREHENSIVE TRADE AND DEVELOPMENT POLICY

FOR THE COUNTRIES OF AFRICA:

Appendix A, Summary of New Initiatives

Economic Reform

• A debt-reduction initiative started after the 1995 G-7 Halifax Summit encouraged the IMF and World Bank to consider measures to assist heavily indebted poor countries (HIPCs), with the objective of reducing their debt burdens to sustainable levels. The HIPC Debt Initiative will be funded by an initial $500 million contribution from World Bank net income, an initial transfer by the IMF of Enhanced Structural Adjustment Facility reserves for individual country cases, and additional debt relief of up to 80 percent from the Paris Club. Other multilateral creditors, including the Inter-American Development Bank and the AfDB and AfDF, are in the process of determining their contributions to this program. In order to be eligible for additional relief, countries must demonstrate a sustained track record of sound economic policy implementation. The Department of the Treasury will continue to provide strong backing so the World Bank/IMF/Paris Club HIPC program can proceed rapidly.
• At the 1996 G-7 summit in Lyon, the heads of state requested that major international economic institutions (UN, IMF, World Bank, World Trade Organization) devote special attention to Africa. In response, the four institutions pledged to give top priority to economic reform and poverty reduction programs essential to economic growth in Africa. The Administration (Treasury, State, NEC, USAID) will be working with these international institutions to develop more specific proposals in time for consideration at the next G-7 Summit in Denver in July, 1997.
• In the past two and one-half years, the African Development Bank/African Development Fund (AfDB/AfDF) have gone through some of the most extensive reforms of any of the multilateral banks. While this process was underway, donor countries withheld concessional funding for the AfDF and postponed consideration of a capital increase for the AfDB. Now that these reforms are substantially complete, in fiscal year 1997 the United States will undertake two major initiatives with respect to the Bank. First, while seeking to meet its obligations to the Bank, the Administration will urge AfDB to intensify its cooperation with the IMF and World Bank on policy-based lending. Over the next year, AfDB is expected to participate with the World Bank in at least two policy-based loans. Second, the Administration will press to make the voting influence of the Bank's non-African shareholders in its decision making more commensurate with their financial contribution.
• In 1997, USAID will implement a new $2.5 million bilateral agreement with the South African Ministry of Public Enterprises to assist the ministry in the restructuring state assets and the possible privatization of public enterprises.

Trade Liberalization and Promotion

• In order to ensure higher level attention and coordination of our trade policies toward Africa with overall trade policy goals, the Deputy USTR has in the past year assumed responsibility for senior level direction of U.S. trade relations with Africa. In addition, USTR is considering creation of a new position within its current resources for an Assistant USTR, whose responsibilities will be dealing with trade policy questions related to Africa.
• The Administration is reviewing the funding possibilities for a multi-year reauthorization for the GSP program. The program must be administered in a stable and predictable manner if it is to provide an incentive to development. In 1997, additional products imported from least developed beneficiary developing countries, mainly in Africa, will be selected for GSP eligibility. These determinations are being made on an accelerated basis and will implement the authority granted to the President in the amended GSP statute that became effective October 1, 1996.
• At the WTO and World Intellectual Property Organization (WIPO), USTR will urge that African countries be provided technical assistance and training in WTO and WIPO procedures and agreements. USIA will provide support to a sub-regional conference on Intellectual Property Rights (IPR) that will be held in Benin and will consider supporting additional IPR conferences that have been scheduled for Africa.
• USTR will send a delegation to key African countries to explain the requirements of the U.S. textile and apparel import regime.
• The Commerce Department will work with the private sector to post a Home Page for African Opportunities on the Internet that will include information on trade and investment opportunities, trade programs, equity funds, and banks available for trade and project finance.
• The State and Commerce Departments will work with the private sector to organize a tour throughout the United States by U.S. Ambassadors to African countries to brief and consult with U.S. companies in order to stimulate interest in doing business in Africa.
• In order to encourage active participation by African countries in the WTO, comprehensive briefings for African Ambassadors on the WTO and other trade and development issues by the State Department and the office of the U.S. Trade Representative (USTR) will be provided during 1997.
• Commerce will initiate a commercial dialogue with the SADC countries with the following goals: a) continued progress toward market-based economic reform in Africa; b) promotion of regional development cooperation; and c) closer commercial relations with the United States. The dialogue will involve the public and private sectors of each side to strengthen public-private cooperation. The experience with SADC could serve as a model for other sub-regions in the future.
• While the Interagency Credit Risk Assessment System (ICRAS) process is classified, private sector representatives and other entities will be invited to provide information and perspectives to the Commerce Department on African economies which might be useful to ICRAS participants in determining credit ratings.
• Eximbank has named a Senior Vice President as liaison to the Eximbank Working Group of the Corporate Council on Africa and plans to continue its dialogue with that organization with a view to providing maximum support to U.S. exporters interested in African markets.
• This fiscal year, Eximbank will send a mission to Africa led by an Eximbank Director.
• Commerce and USAID will co-sponsor a Trade Protocol Forum for the visiting SADC delegation, to assist the SADC countries in implementing the trade protocol they signed in August 1996. The forum will discus issues in trade and economic integration, costs and benefits for the SADC members, and implications for the government and private sectors of SADC and the United States.
• Commerce devoted the January 1997 issue of Business America to Africa, including articles on the region's commercial opportunities and information on U.S. Government programs to help firms in African markets.
• U.S. embassies in Africa will be instructed to expand commentary in their annual Country Commercial Guide to catalog market access barriers to U.S. products. Such a catalog of trade barriers would include those that are WTO incompatible, but also those in which WTO acceptable tariffs are so high as to discourage American exports (e.g., extremely high tariffs on large vehicle engines.)
• Commerce and OPIC will host roundtables on commercial development in Africa to explore with appropriate private sector organizations ways to structure and support a commercial development mission to Africa by U.S. banks and other financial institutions. The objective of such roundtables and prospective mission would be to better acquaint U.S. private sector financial institutions with African commercial opportunities, with the hope they might expand their operations in the region.
• TDA will fund reverse trade missions involving high-level Africans in the health industry and solid waste industry. By doing this, American firms will learn of new market entry opportunities and the Africans will become more aware of U.S. technologies and specific firms capabilities.

Investment Liberalization

• Five OPIC funds are available to invest equity in projects in Africa. In addition to the Allied Capital Small Business Fund and OPIC's first environmental fund, the Global Environment Emerging Markets Fund I, three other OPIC funds can and do make investments in Africa. These funds are the $120 million New Africa Opportunities Fund, the recently-approved Aqua International Partners Fund, which is a $300 million fund that will focus on private water-related projects, and OPIC's second environmental fund, the Global Environment Emerging Markets Fund II (GEMF II). This GEMF II fund has already made an investment in a water purification project in South Africa.
• In September 1996, the IFC approved a new $40 million program (the "Reach Initiative") to extend its work to developing countries in which there has been little interest on the part of world capital markets and where IFC itself has not been active. The Administration strongly supports this program. The program will focus on enterprises/projects that are smaller than those typical subjects of IFC programming. The fourteen targeted African countries include, Eritrea, Ethiopia, Congo, Senegal, and Mozambique.
• OPIC will seek to expand its current client base for on-lending facilities. These facilities can provide needed access to capital for investment in Sub-Saharan Africa.
• In Angola, USAID will be providing assistance in reviewing that nation's investment codes in an effort to make it attractive for domestic and overseas investors; follow-up activities will include assisting the Angolans to establish a "one stop investment shopping center." In Uganda and Tanzania, USAID will conduct feasibility studies and help prepare business plans for the establishment of sustainable microenterprise credit and savings institutions to be operated by Pride Africa, a U.S. registered non-government organization based in Nairobi. USAID's activities to support capital market development will culminate with the launching of an interim stock trading facility in Uganda early next year. Future technical assistance in this area will involve: (a) training new regulators; and (b) establishing private pension funds to assist with the mobilization of capital for domestic investments.

Private Sector Development

• Treasury will urge the AfDF to expand its lending to, and collaboration with, the African private sector, specifically by instituting co-financing of infrastructure projects and beginning a program of lending to micro-enterprises. The President of AfDF has said that his objective is to increase Bank lending to the private sector to 25 percent of its total lending (from negligible levels prior to 1996).
• Eximbank will identify markets in which it currently is not open for routine transactions, but which have improving economic conditions and a positive environment for private sector development, in an effort to expand U.S. exports to the private sector, including newly privatized firms, through creative financing.
• USIA will support, through its private sector program, U.S. internships for African entrepreneurs arranged by the Corporate Council on Africa.
• The Administration will work through established government/private sector cooperative bodies to explore methods of maximizing the utility of Embassy unclassified reporting and making it more readily available to American businesses.
• Through its Agricultural Research Service, USDA is collaborating directly with South African agricultural research institutions as a model system for effecting a transformation to viable farming there and will seek to apply the results in other southern African countries. The research emphasizes the use of indigenous species of plants and animals to produce higher yields, environmentally safer treatment to increase shelf life of fruit exports, and increase opportunities for rural craft industries producing meat and meat by-products.
• The U.S. Department of Labor will continue to support the Administration's goal of improving essential government institutions by providing technical assistance to interested African countries contingent upon USAID funding. Specifically, the Department of Labor will work to help improve the ability of Labor Ministries to enhance labor market information capabilities, strengthen labor standards and training, and enforce laws.
• USAID will undertake in 1997 a number of new initiatives to promote the development of the private sector in Sub-Saharan Africa. For example, in South Africa, USAID's Equity Access Systems will sponsor a $7.5 million technical assistance program to improve access to equity and long term debt by African entrepreneurs; assistance will be provided to small and medium enterprises to bring them to the "bankable" stage by making them attractive for venture capital investment and/or loan financing. Also, USAID has developed new analytic tools to assist Sub-Saharan countries to assess and improve the competitiveness of their private sectors. Use of such tools will begin in Uganda and Tanzania to help such countries identify and promote new investment opportunities.
• The Administration will encourage the World Bank Group to increase outreach efforts to ensure that African entrepreneurs, including consultants, are better able to bid for World Bank contracts.

Infrastructure Enhancement

• The Administration will establish an interagency group on private infrastructure promotion and finance for Africa which would help focus and refine proposals for support of privatization and new private infrastructure projects.
• To encourage and promote the regionalization of telecommunications underway by OAU members, and to build on existing cooperation with the International Telecommunications Union, the Federal Communications Commission (FCC) and the Department of State will assist with institutional strengthening of regional organizations such as the Pan African Telecommunications Union, the Regional African Satellite Organization, and the African Regional Advanced Level Telecommunications Institute.
• The Energy Department will develop a framework for a sustainable U.S. energy policy vis-a-vis Africa through an examination of the current status of African energy demand and supply, energy needs and capacity of the African continent, the role of U.S. energy technology in fostering a sustainable energy future in Africa, and innovative project financing methods.
• A number of cooperative efforts to encourage development of an environmentally sound infrastructure in Sub-Saharan Africa will be undertaken in 1997. One approach will provide funding for cooperation in adapting U.S. technology to meet South Africa's critical environmental needs. A second approach will offer training for the trainers on environmental management and enforcement in South Africa and additional training on priority environmental topics to be funded on a private sector/government cost-sharing basis. The third involves issuing small grants (up to $20,000) to assist community groups in developing environmental capacity.