US could trump China in Africa by fixing rather than quitting pact
• While the African Growth and Opportunity Act is not perfect, killing it off will hobble many economies on the continent and undermine a free flow of trade
The African continent simply cannot handle any more economic damage, so it will be catastrophic if President Donald Trump repeals the African Growth and Opportunity Act (Agoa) and goes lights out on Africa.
Agoa falls into the big fat “trade” basket that’s been on the top of Trump’s agenda since taking office. He was certainly clear about his feelings on that during his election campaign.
He pulled the plug on the Trans-Pacific Partnership (TPP) on his fifth day in office. And he’s pounding Mexico every day like a child whacking a candy-filled piñata at a birthday party. He is not wasting time getting started.
There is talk that Trump may want to revoke other trade agreements including Agoa largely because, like TPP, they are multilateral deals he believes are lopsided and bad for the US.
His thinking on trade is understandable. Many Americans are angry at how things have gone over the past decade. Many weren’t fans of how Barack Obama engaged with the rest of the world.
Trump’s campaign slogan, America First, was good — short, snappy and only five syllables. It worked; he won. Indeed, protecting a country’s sovereign interests should always be its first priority. But according to the thesaurus, isolationism and protectionism are not listed as synonyms for sovereignty.
The irony is that for all the manufacturing jobs Trump is looking to create in the US with his new trade policies, there are also millions of other jobs that rely on the relationships the US has with its global partners that will be hurt or lost altogether.
Many of the assembly-line jobs Trump wants to bring back are now being done by robots and technology. Many of them simply no longer exist.
It’s safe to say that robotics is a manufacturing trend that will continue. So, while Trump may be gaining some jobs by bringing manufacturing back from Mexico and China, he’ll ultimately be killing others.
Some of the US’s allies are getting edgy because Trump has essentially announced that the US is voluntarily giving up its front-row seat at the theatre in favour of one in the last row of the balcony.
Does he understand that to lose the US as an export and business partner would result in some level of economic calamity for most countries that do business with the US?
And that this means virtually everyone on the planet — including much of Africa?
Trump says he wants to protect the US, but globalisation isn’t going to vanish irrespective of the nationalistic winds sweeping across the US and Europe.
And he shouldn’t expect that other countries are going to roll over and agree to everything he demands just because he is the president of the US. Those days are over.
Since he ripped up TPP, Canada is talking about doing more business with Japan and China. That conclusion took Prime Minister Justin Trudeau about three days to reach.
There are, obviously, other big suitors out there with strong economies that will seize the opportunity to replace the US in the driver’s seat. And besides China and Japan, there is India, Saudi Arabia and Trump’s good friend, Vladimir Putin, who are chomping at the bit to throw money and influence at everyone the US decides to orphan.
Trump should not isolate the US. As Chinese President Xi Jinping said at Davos last month, “Pursuing protectionism is like locking oneself in a dark room.”
The US has to do business with the rest of the world. It can’t just lower the shades and hang the “closed” sign on the front door. The world is too interconnected and pulling the plug on trade will have severe repercussions — many of which even the brightest minds can’t foresee because what Trump is doing has never been done before — not like this, anyway.
While we don’t know what Trump’s advisers are telling him, he might want to google the phrase “ripple effect” and see what it says.
And after he has done so, he should consider Agoa. It has been the centrepiece of US policy in Africa since Bill Clinton signed it into law in 2000.
Trump probably knows this. And he’s probably been told — quite correctly — that Agoa isn’t perfect. But he can’t simply walk away from a continent with 1.1-billion people that is expected to grow to 2-billion people or more by 2050.
Quite frankly, as a businessman, he should be salivating over this and trying to figure out a way to unseat China at Africa’s dinner table.
He has been fixated on Beijing since before taking office. Think about it — how great would it be to go after China by drastically growing the US presence in Africa and increasing investment and trade?
It would be the ultimate kick to China’s groin. Trump could be the New York dealmaker we all know he is and show us The Art of The Deal, as his book is so aptly titled.
Agoa hasn’t lived up to its promise. Some of the big oilproducing countries such as Nigeria and Chad have derived the most benefit from it, even though there have been well documented abuses with respect to corruption and exploitation. And some of the smaller countries such as Malawi and Gabon have barely even registered on the Agoa meter as their private sectors are so underdeveloped that they have little to export outside of a few crops. Yet, at the same time, there have also been many success stories in sectors such as textiles, agriculture and auto manufacturing that demonstrate Agoa’s promise and what it was originally meant to achieve.
But these large oil-producing countries would take a huge hit if Trump moves to dismantle the pact because a large percentage of their current and future export revenue would be wiped out. With oil prices already weak and production down, this would compound the effect of Agoa’s demise drastically.
Most African economies have little to no room for error. So the effect of Agoa being rescinded would ripple violently across the continent.
And if Africa’s already hobbled economic leaders such as Nigeria decline even further, the whole continent would ultimately be affected as many of the smaller countries, already on tentative economic footing, would be dragged down with them. This would be devastating for the continent.
Therefore, Trump shouldn’t kill Agoa, he should fix it. He should renegotiate the parts of it that don’t work, just as he will probably end up doing with the North American Free Trade Agreement and even TPP.
He should make it better — put new checks and balances into the system to stem corruption, calculate the structure differently and impose tougher punitive measures or even more stringent disqualification guidelines for those countries who violate the pact’s tenets.
At the same time, Trump should perhaps look to build in new incentives so that some of the non-oil-producing countries can finally benefit from Agoa in the way the pact was originally envisioned.
Agoa benefits Africa and the US. It opens up the world’s largest market to many African countries, while allowing for the duty-free flow of culturally diverse, quality products to US business and consumers. Agoa can be America First and Africa First. What could be better? Everyone wins.
TRUMP SHOULDN’T EXPECT COUNTRIES ARE GOING TO ROLL OVER AND AGREE TO EVERYTHING HE DEMANDS