The document summarizes a presentation on opportunities and constraints for improved trade between the US and Africa under the African Growth and Opportunity Act (AGOA). It identifies key sectors such as apparel, textiles, agribusiness and leather that show potential for growth under AGOA. Recommendations focus on attracting foreign investment, improving infrastructure and reducing corruption. Case studies of specific countries highlight steps needed to strengthen priority industries like textiles in Ghana and apparel production in Lesotho.

1. Key Opportunities and Constraints for Improved U.S. Trade and Investment with Africa Presented by: Cargill Technical Services, Inc. African Coalition for Trade, Inc. Africa-U.S. Trade Services, Inc. Sponsored by: U.S. Agency for International Development (USAID) Under the Africa Trade and Investment Policy Project (ATRIP) January 14, 2003

2. Agenda 1. Introduction of Project - Charity Hanif, Cargill Technical Services (CTS) 2. US Africa Trade Status - Jim Maxwell, CTS /ARD 3. Brief Overview of AGOA - Paul Ryberg, African Coalition for Trade 3. Findings & Recommendations - Jim Maxwell, CTS /ARD 4. Garments Case Study - Didier de Senneville, Africa-U.S. Trade Services 5. Questions/Discussion - All

3. The Project Objective Propose ways to capitalize on the key opportunities and overcome the key constraints to improved trade and investment between the U. S. and Africa, especially as related to AGOA. Focus on perspectives of the private sector. Methodology Use four sectors as case studies, focusing on those having good potential under AGOA Apparel, textiles, agribusiness, and leather and leather products Conduct research in six African countries Lesotho, Senegal, Ghana, South Africa, Uganda, & Zambia Use telephone survey of U.S. businesses for their. perspectives Collect information at AGOA Conferences in Ghana and Uganda

4. U.S. - Africa Trade Status Setting the Stage

5. U.S. Imports from Sub-Saharan Africa AGOA Introduced AGOA Enacted

6. U.S. SSA Imports by Major Commodity Source: International Trade Commission data from AGOA website. 53% 21,060 22,213 13,750 Total -67% 1 1 3 Footwear -5% 53 58 56 Electronic products 10% 109 97 99 Misc. manufacturers 8% 119 141 110 Forest products 105% 263 178 128 Machinery 27% 268 217 211 Special provisions 99% 400 185 201 Transportation equipment -22% 660 1,454 849 Chemicals & related products 0% 836 875 833 Agricultural products 60% 998 789 622 Textiles and apparel 17% 3,082 3,201 2,638 Minerals and metals 14,271 15,016 8,001 Energy related products 2001 2000 1999 $ Millions

7. Updated US AGOA Imports Data First Nine Months ‘ 02 - $11.4 billion Total/$7.0 billion AGOA ‘ 01 - $15.4 billion Total/$7.3 billion AGOA Change - (25%) Total/+4% AGOA AGOA Share - 47.4% in ‘01 vs. 61.4% in ‘02 Projected Full Year ‘ 02 - $15.7 billion Total/$9.9 billion AGOA ‘ 01 actual - $21.1 billion Total/$9.5 billion AGOA Change - (25.6%) Total/+6% AGOA AGOA Share - 45% in ‘01 vs. 63.1% in ‘02

8. Growth in Non-Energy Duty-Free Trade 2000 vs. 2002 ($ million)

9. Growing U.S. Apparel Imports from SSA 33% 218.5 2001 Source: African Coalition for Trade, Inc. 15% 250.0 2002 28% 164.2 2000 128.2 1999 (million sq. meters % Increase Imports U.S. Apparel Imports from Sub-Saharan Africa

10. U.S. Agricultural Imports: Total and SSA Source: Provided by African Coalition for Trade

11. U.S. Trade with Six Selected SSA Countries 21,292 Total SSA 0.1 16 Zambia 0.1 18 Uganda 0.1 11 Senegal 0.9 185 Ghana 1.0 217 Lesotho 20.8 4,429 South Africa % of Total 2001 U.S. Imports with Six SSA Countries of Study, 2001 ($ Millions)

12. The Legal Context Act Overview

13. AGOA extends to Africa the most beneficial US trade and investment program available to any region of the world

14. AGOA’S TREMENDOUS OPPORTUNITIES APPAREL: QUOTA-FREE/DUTY-FREE ACCESS The most liberal access to U.S. apparel market GSP: SPECIAL BENEFITS FOR AFRICA 8-year extension 1,800 new duty-free products US-AFRICA TRADE AND ECONOMIC FORUM Permanent venue for new policy initiatives FREE TRADE AGREEMENTS

15. LDC’s vs. Non - LDC’s Non-LDCs: Duty-Free for Apparel made from U.S. or African yarn/fabric and fabric unavailable in U.S. Non-LDCs: Equatorial Guinea, Gabon, Mauritius, Seychelles, South Africa AGOA II moved Botswana, Namibia to LDC category LDCs: Duty-Free for Apparel made from Third-Country Fabric for 4 years Major apparel producers among the LDCs: Kenya, Lesotho, Madagascar, Swaziland

16. Apparel Products Eligible for Duty-Free Access LDC’s only: Made from third-country fabric only during the first four year, i.e., through September 2004 Made from fabric made in Africa from either US or African yarn Subject to TRQ Subject to TRQ

17. Duty-Free Access for: Made from cut US fabric Made from uncut US fabric and sewn with US thread Knit-to-shape cashmere sweaters, regardless of the origin of the yarn Sweaters made from fine wool, regardless of the origin of the yarn No TRQ No TRQ No TRQ No TRQ

18. Duty-Free Access for: Apparel made from yarn or fabric “unavailable” in the US Certified handloomed, handmade and folkloric apparel No TRQ No TRQ

19. 2001 AGOA Apparel Imports (million square meters) 2001 AGOA Apparel Imports (million square meters)

20. 2002 AGOA Apparel Imports Through October (million square meters)

21. Approved AGOA Visa Systems Botswana Mauritius Cameroon Mozambique Cape Verde Namibia Ethiopia Senegal Ghana South Africa Kenya Swaziland Lesotho Tanzania Madagascar Uganda Malawi Zambia

22. Recommendations for Improving AGOA Related Trade & Investment

23. Recommendations focused on government actions Low export figures reflect the need for a mindset change - Proactive vs. Reactive Introduction

24. General Recommendations 1. Establish sector priorities & focus on one or two high priority sectors 2. Develop a good understanding of the priority markets 3. Understand and embrace the need of foreign capital and expertise 4. Identify high potential investors and buyers in the priority sectors - Identify current top competitors and encourage them to relocate/expand 5. Design and implement competitive sets of incentives to attract foreign investment in target sectors

25. General Recommendations (cont.) 6. Stay informed of competitive incentive packages offered in the region and around the world 7. Identify and implement the infrastructure and policy reform required by foreign investors 8. Solve the logistics challenges 9. Dramatically reduce corruption 10. Encourage U.S. and foreign textile manufacturers to invest in Africa, where competitive

26. General Recommendations (cont.) 11. Establish a service to provide information on viable African trading companies 12. Establish a “One-Stop-Shop” to reduce bureaucracy and streamline the business formation process 13. Try to narrow the gap between AGOA expectations and results 14. Consider joint government/private enterprise training facilities - Skilled workers - Supervisors

27. Textile Sector

28. Recommendations 1. Design a regional approach to optimize the contribution of the textile (and garments) sector Develop a supply chain for African cotton & textiles 2. Establish a promotion program to introduce U.S. and foreign textile companies to the target locations/countries: Proposed action plan ( a) Identify high potential investors (b) Prepare a highly competitive set of incentives for those investors (c) Promote the benefits of locating and manufacturing in Africa, especially as (indirectly) related to AGOA

29. Recommendations by Country Ghana, Senegal and Uganda: Develop and modernize existing old mills Zambia: Take advantage of track record for Swarp Textile Mills Find an investor for Kafue Textile Mills Lesotho: Develop the textile sector to diversify and strengthen the apparel sector South Africa: Play a key role in the development of the textile and apparel industries in the region

30. Example - Ghana Good potential Favorable conditions 1. Geographical location 2. Good quality local cotton available 3. A small but active textile industry already involved in regional exports 4. Abundance of water 5. Existing trade links with regional markets

31. Apparel Sector

32. Recommendations 1. Provide factory shells to accommodate exporters 2. Attract support industries and improve logistics 3. Address the issue of imports of secondhand apparel from the U.S. (e.g., safeguards) - Need for back-up market

33. Recommendations 4. Apply duty-free import status for re-exported inputs 5. Enforce Intellectual Property Rights (IPR) 6. Comply with major U.S. buyers’ standards for labor, human rights and the environment

34. Example - Lesotho Industry developing quickly Seven conditions for success 1. Positive example of existing production base 2. International companies already operating 3. Factory shells available 4. Effective trade promotion efforts 5. Good infrastructure and management 6. Stable political situation 7. Apparel sector is a priority cluster for government

35. Agribusiness Sector

36. Recommendations Identify agribusiness’ priority for development of trade and investment with the U.S. Develop a program to understand U.S. quality standards and obtain information on the U.S. market Comply with the U.S. Phytosanitary Regulations Ensure proper use of pesticides and fertilizers in production agriculture

37. Recommendations(cont.) 5. Identify how to supply quantities needed to meet large orders 6. Develop logistics facilities for agribusiness exports 7. Develop financing programs 8. Follow internationally accepted labor policies and establish a self-policing system

38. Example - Ghana Ghana’s total agr exports to U.S. were $58 mil in 2001 Source: U.S. International Trade Commission data Free 100 Coconut oil Free 300 Palm oil Free 700 Bran 11.3%/GSP duty-free 1,100 Cassava 0.52 cents/kg/GSP duty-free 6,800 Cocoa powder Defatted: 0.2cents/kg, GSP duty-free Not defatted: free 7,200 Cocoa paste Free 39,700 Cocoa beans ($ 1,000) NTR Duty 2001 Exports Product

39. Example - Ghana Opportunities: 1. Semi processed and processed cocoa beans - Big market, established source 2. Fresh and processed fruits - Success story: fresh sliced pineapple exports to U.K. 3. Cassava starch - Ready market growing at 5%; starch price 5X cassava 4. Processed fish

40. Leather Sector

41. Recommendations Countries with significant livestock herds should consider increasing the priority substantial duty reduction under AGOA Uganda and Zambia : add value to raw hides South Africa: develop all segments of the industry Ghana, Lesotho, Senegal: limited scope

42. U.S. Footwear AGOA Imports Source: Prepared by African Coalition for Trade, Inc. 159% 1,400 534 Total 42% 94 66 Others 600% 14 2 Senegal <80%> 7 35 Kenya <90%> 14 142 Cameroon 8000% 81 1 Cote d'Ivoire 14% 119 104 Zimbabwe 320% 210 50 South Africa 537% 854 134 Sierra Leone % Growth 2001 2000 ($1,000)

43. Recommendations for the Synthetic Athletic/Leisure Shoe Industry Place special emphasis on this industry, given its size and unique duty concessions South Africa and Lesotho: accelerate development Ghana, Senegal, Uganda, Zambia: look closely at this sector

44. Recommendations by U.S. Companies to Improve African Trade and Investment

45. General Recommendations 1. Establish a service to provide information on viable African companies 2. Establish U.S. training seminars on opportunities for doing business in Africa 3. Governments should continue efforts to improve telecommunications 4. Develop a strategy to expand air freight services between Africa and the U.S.

46. Recommendations (cont.) 5. Establish a “One Stop Shop” to improve the licensing systems and reduce the bureaucracy in this process 6. Improve and expand power and transportation systems availability, cost, and reliability 7. Continue efforts to move toward a free market economy so African companies can become/remain internationally competitive 8. Significantly reduce corruption

47. Source of Information The U.S. ITC website is an excellent source for official U.S. trade data and import duty information You will find the website at www.usitc.gov The site is user friendly & should be helpful for imports and tariff information

48. Conclusion AGOA offers new opportunities for expanded African-U.S. trade The best opportunities appear to be in apparel and agribusiness products To capitalize on the apparel opportunity, investments in textiles must be made

49. We welcome your comments and suggestions Thank you!