Libmonster ID: U.S.-1336
Author(s) of the publication: A. P. KOVALCHUK

A. P. KOVALCHUK

Candidate of Economic Sciences

Institute of Africa, Russian Academy of Sciences

Keywords: American-African trade, geo-economic interests, AGOA law, Commodity Credit Corporation

In recent years, economic relations with African countries have been increasingly subordinated to the tasks of global geopolitical and geo-economic interests of the United States. The US administration is implementing its strategies on the continent, including by stimulating US-African trade.

In recent years, the world's leading powers have been paying increased attention to implementing their policies in Africa.

Despite the modest place that Africa occupies in US foreign economic relations (excluding energy imports) compared to other regions, the US administration constantly keeps this continent in the focus of its attention, guided by the general directions of the strategy developed about a decade and a half ago, which are only clarified with the beginning of each new presidency.

With the arrival of the Obama administration in Washington, US policy in Africa is moving in three main directions: accelerating the integration of African countries into the global economy; promoting peace and security on the continent; and developing and strengthening relations with those Governments, institutions and civil society organizations that Washington believes are committed to deepening democracy.1

In general, as noted by Russian Africanists, economic relations with the countries of the continent in the last 10-15 years have been increasingly subordinated to the tasks of implementing Washington's more general global geopolitical and geo-economic interests.2 Despite the diversification of energy supply sources and the gradual reduction of US energy dependence on foreign markets (including through shale gas, as well as the development of its own and Canadian oil fields), economic interest in Africa continues to grow.

At the same time, it should be noted that since the beginning of the current global financial and economic crisis and the aggravation of debt problems in the country, the United States is paying more and more attention to the problem of stimulating its exports of goods and services to various regions of the world, including Africa.

A special place in the American model of trade and economic cooperation with Africa is occupied by the Law on Economic Growth and Trade Opportunities in Africa (African Growth and Opportunity Act - AGOA). Adopted in 2000, this law is a kind of policy tool designed to stimulate American-African trade through the provision of preferences and financial assistance to expand the volume and diversification of trade.3

In adopting the AGOA, the U.S. Congress recognized that Sub-Saharan Africa (SSA) is a region rich in Human and mineral resources, with enormous economic potential, and therefore of long-term political interest to the United States4.

Initially, the term of the AGOA was supposed to be limited to 2008, but in 2004 it was extended to 2015.

The Law defines 3 main criteria for selecting countries to be included in the list of beneficiaries of trade preferences:

1. The country has made some progress in developing market relations based on protecting private property rights and limiting government intervention in the economy; having a fair judicial system and the rule of law; removing barriers to U.S. trade and investment; protecting intellectual property; and implementing economic policies aimed at reducing poverty, ensuring access to health care, and providing opportunities support in the development of entrepreneurship and capital markets through the implementation of credit programs.

2. The country does not engage in actions that undermine the national security or foreign policy interests of the United States.

3. The country does not support acts of international terrorism and actively cooperates in international efforts against human rights violations.

Based on these criteria, in 2000, 38 SSA African countries were granted the status of beneficiaries of AGOA trade preferences (this number varies from time to time). For these countries, it provided for the abolition of import duties to the United States for more than 6.4 thousand rubles. thus opening up new opportunities for simplified access of their finished products to the US market 5.

The main direction of supporting American exports to Africa is to create favorable institutional conditions for US companies to sell goods, services and profitable commercial projects. The State Department coordinates the activities of-

page 14

Chart. Trade turnover between the AGOA beneficiary countries and the United States ($ billion).

all ministries and departments, state organizations and their representatives abroad. Under the auspices of the State Department, meetings of coordination and advisory committees on various issues related to foreign economic activity are held with the participation of representatives of business structures to take into account their position on major international or bilateral events that directly affect the interests of the US business community.

Within the framework of the AGOA, such American private companies and government agencies as the Corporation for Private Foreign Investment (OPIC), the US Export-Import Bank (Ex-ImBank), the US Department of Agriculture, and the US Trade and Development Agency provide comprehensive support to African countries seeking to expand trade and economic cooperation with the United States.6

OPIC Corporation supports American businesses by providing loans and guarantees for investment in new and emerging markets. The main activity of the corporation is financing small and medium-sized business projects for companies with annual revenues of no more than $400 million 7.

Ex-ImBank finances the export of American goods and services to African countries. The bank's guarantees are issued for up to 10 years for the supply of goods to Africa, and the amount of coverage can be up to 98% of the export contract amount.8 Such bank guarantees are also issued for the purchase of hardware and software for computers.

The U.S. Department of Agriculture coordinates the work of the Commodity Credit Corporation (TCC), which implements various export credit programs for American agricultural products. As part of its Export Credit Program, about $3 billion in loan guarantees were provided in 2013. to cover the risks of financing the export of American agricultural products to developing countries 9. In particular, in 2013, about $254 million in loan guarantees were provided to finance the export of American agricultural products to African countries.10

AGOA gave an impetus to the development of American-African trade. As the chart shows, between 2000 and 2013, US imports from the AGOA beneficiary countries increased from $22 billion to $38 billion, while US exports increased from $6 billion to $23 billion.11

Until 2009, trade turnover was growing rapidly due to the strengthening of the US presence on the African continent and, despite the beginning of the global crisis, it continued to grow, reaching a peak value of $100 billion in the history of AGOA in 2008.

During this period, US exports to Africa increased more than 3-fold and amounted to more than $18 billion, which was driven by growth in various items, including equipment, vehicles and components, wheat, petroleum products, aircraft, and telecommunications equipment. U.S. imports increased to $82.1 billion, mainly due to a significant increase in crude oil imports12.

The first wave of the crisis, which occurred in 2007-2009, bypassed the States of the African continent 13. The African economy, not responding to the curtailment of markets for African raw materials in the West, continued the progressive development of the previous seven years. Almost

page 15

all African countries have been quite successful in resisting the blows of the crisis, which was greatly facilitated by the fall in world food prices.

The commodity nomenclature of exports and imports in trade between the United States and all countries of the continent has hardly changed over the past decade. The United States still exports high-value-added products (engines, components, petroleum products, equipment, and electronics) to Africa, while it imports crude oil (about 80% of all imports). African deepwater oil is highly valued by experts for its high quality: this is a light and low-sulfur oil. At the same time, the routes of African oil supplies across the Atlantic Ocean to the United States are twice as short as from the Middle East. In addition, African countries offer American investors, as a rule, favorable treatment in the oil industry. Thanks to this, American companies achieve a high level of profitability in the SSA countries - 2830%.

In 2012, the leading export markets for the United States in the sub-region were: South Africa ($7.6 billion), Nigeria ($5 billion), Angola ($1.5 billion), Ghana ($1.3 billion), and Ethiopia ($1.3 billion) .14

The main items of American exports are machinery and equipment ($4.4 billion), vehicles (3.9 billion), aviation equipment (2.1 billion), mineral fuel (oil) ($1.9 billion).

The United States is a major supplier of food to Africa. U.S. agricultural exports to the SSA countries totaled $2.6 billion in 2012, including wheat ($1.2 billion), poultry (484 million), vegetable oils and legumes (169 million), and rice ($147 million)15.

The United States buys primarily energy resources from the continent, but also various types of industrial raw materials, including cobalt, chromium, manganese, platinum group metals, industrial diamonds, zinc, lead, titanium, uranium, bauxite, and agricultural products.

Various types of agricultural products from African countries are also becoming an expanding source of American imports, which was also greatly facilitated by AGOA. According to American experts, the law provided African suppliers with real opportunities to export not only industrial raw materials to the United States, but also agricultural products. Thanks to the implementation of this law, Africans were able to increase the share of exports of manufactured goods (textiles, clothing, cars), as well as diversify their agricultural exports and, as a result, significantly increase the number of jobs.

Currently, the bulk of American agricultural imports from Africa come from three countries-South Africa, Madagascar and Ivory Coast. Commodity supplies from the last two countries, respectively, are vanilla and cocoa beans. The range of exports from South Africa is more diverse and includes citrus crops, wines and other products. South Africa, in particular, is the main supplier of oranges to the United States.

The AGOA is also aimed at providing assistance to American companies operating on the continent. In addition to encouraging the steady growth of trade turnover, this law helps American businesses insure their property against investment risks. In addition, this law is an effective tool for ensuring the preferred access of American companies to the markets of African countries. The United States is currently competing for resources and markets here not only with new players from Asia and Latin America, but also with its European Union allies. Through the "framework agreements on trade and investment", the signing of which provides for this law, the United States seeks to ensure the most favorable business climate for American businesses in specific countries of the continent.

Accumulation of financial resources in African countries opens up new opportunities for mechanization and automation of production, development of cooperation.

In Madagascar, for example, the implementation of reforms has created a basis for increasing the flow of private investment. Their industry structure became more determined by the needs of the external market, investments were made in the development of production of goods that can withstand competition in the Western European and American markets. On the basis of vanilla cultivation, oils and perfumes began to be produced. Ghana began exporting not only cocoa beans, but also processed cocoa butter. Uganda, a traditional supplier of unprocessed coffee beans, has significantly increased the supply of special varieties of roasted and ground coffee beans abroad. To maximize the impact of the AGOA and other initiatives put forward by the United States, African states are following the most promising path, constantly diversifying their production structure.

During a meeting of business leaders of African countries with senior representatives of the US state apparatus in August 2010 in Kansas (Missouri), it was noted, in particular, that the supply of agricultural products from Black African countries could significantly expand if the US administration refuses to use tariff quotas for such African goods exported from the SSA, such as sugar tobacco, groundnuts (peanuts). According to many experts, such restrictions restrict trade in goods for which there is a real potential to expand supplies from a number of African countries16.

In addition, the United States provides large subsidies to its cotton farms, which makes these products cheaper compared to similar products of African countries. Therefore, some African countries do not supply cotton to the United States at all, and in some sectors (for example, the textile and clothing industry), competition is so strong that it is almost impossible to enter such a market in the United States, despite the AGOA. Some African countries are forced to curtail cotton production, even though it could generate large profits. Overall, there are more than 10 million people in Central and West Africa, especially farmers from Benin, Chad, Mali and Bur-

page 16

Burkina Faso, depend on cotton production and trade 17.

In response to criticism of the US side, the US trade negotiator at the VIII Forum on the Development of Trade and Economic Cooperation between the US and the SSA countries (August 4-6, 2009, Nairobi) stated that his country is ready to reduce subsidies to its cotton farms only within the framework of a broader international agreement that would provide for the consent of such countries. countries such as China and India to open their markets to U.S. supplies of raw cotton and processed products 18.

Finally, African leaders are in favor of extending the time frame for the AGOA, which would further strengthen cooperation between the United States and African countries, in particular between the United States and regional textile producers. In the meantime, the number of potential investors remains relatively limited, as the law expires in 2015 and the future of African textile producers looks uncertain. Thus, at present, the issue of extending the validity of the AGOA (ending in September 2015) is quite acute.

US corporations also show considerable interest in the mining industry in African countries. US investment is concentrated primarily in the SSA countries where various types of mineral resources predominate-Angola, Nigeria, South Africa, Ghana, Gabon, Kenya, Liberia and Zambia. However, if we take into account that only a third of the output of mining enterprises controlled by American corporations goes to the United States, it becomes clear that US corporations seek to monopolize the sources of natural resources not only to meet the needs of their economy, but also to gain the opportunity to influence world prices and extract significant profits from the sale of raw materials third countries.

To strengthen their positions in the continent's raw materials industries, American corporations, along with traditional methods of penetration, use new, more flexible forms and methods. Thus, taking advantage of the weak material and technical base, the lack of qualified engineers and managers of oil companies in Africa, US corporations often resort to concluding management contracts, establishing scientific, technical and technological ties that provide them with a significant, often dominant, position in the fuel and energy sector at low costs. In addition, taking advantage of the dependence of these countries in the field of transportation and marketing of oil, US corporations keep under their control the oil markets in a number of countries on the continent.

The US leadership circles openly tell the leaders of African countries about the existing shortcomings in their countries, about the need to improve the indicators that form the concept of "investment climate". In June 2012, a new presidential directive on the US strategy for sub-Saharan Africa was released. The priorities identified are: strengthening democratic institutions; promoting economic growth, trade and investment; strengthening peace and security; and promoting opportunity and development.19

Barack Obama devoted his speech at the University of Cape Town in June 2013 to the policy of the Washington administration in relation to Africa, in which he pointed out key aspects of US interaction with the countries of the continent. According to him, these are food security, poverty eradication, health development, and security cooperation. The United States will allocate $7 billion over five years to develop energy under the announced new Energy for Africa Program20.

The Obama administration has said that aid to African countries will be closely linked to trade development and growth promotion. Much attention will be paid to strengthening the base for the recovery of the agricultural sector, which will significantly reduce the food problem on the continent and at the same time raise the standard of living of millions of Africans engaged in agriculture.21 Using U.S. aid to develop rural infrastructure, create irrigation systems, and build storage facilities, including refrigeration units, will ultimately help expand opportunities for increasing agricultural exports to the United States.

In recent years, the American market has seen an increase in the activity of companies from some African countries. Volume of accumulated direct investment by African countries in the US economy in early 2010 It was worth about $1.7 billion, with the main investors being Liberia ($898 million) and South Africa ($621 million). Most of the investment is concentrated in the mining and trade sectors of the United States. Although direct US investment in the Black Continent is currently more than 26 times higher than African investment in the US economy, the arrival of capital from the Black continent to the US indicates an increased role of companies from individual African countries in international investment processes.22

A special place in the international movement of US capital to developing countries in Africa is occupied by the export of public capital, which is mainly carried out in the framework of official development assistance (ODA). The strategic goal of ODA is to allocate financial resources for lending to industries and activities that are most important for the development of the continent (education, health, infrastructure, manufacturing)23. In 2013, ODA to Africa totaled $28.9 billion.24

The choice of the main recipients of American aid is still characterized by a politically biased approach. Its provision to African countries is primarily determined by military-strategic, political and economic goals, including the use of aid programs to expand American exports. The largest recipient of ODA on the African continent-

page 17

Those are Egypt ($1.8 billion in 2012) 25. In June 2014, the US Congress approved the lion's share of a $650 million military aid package for Egypt. For the 2014/15 fiscal year, the US administration requested congressional authorization for the allocation of aid to Egypt, amounting to a total of about $1.3 billion. New defense contracts (between Washington and Cairo) are not concluded. U.S.-Egyptian relations, according to Washington, "are now at a difficult stage." In particular, the United States "does not share the views of the Egyptian government that there are links between the Muslim Brotherhood and terrorist groups like Ansar Bayt al-Maqdis." 26

The US position in Africa in the current decade has been under pressure from some Asian and Latin American emerging market economies, primarily China and India. Back in 2009, the United States gave up its position as the main trading partner of African countries to China. As the interest of major world powers in African natural resources, especially oil fields, increases, the United States is gradually being squeezed out of certain African countries, which naturally affects the interests of the United States27.

Washington understands that the stability of the practical use of African countries for its own economic and political interests depends, first of all, on the stability of the developing military-political situation on the continent, which, in its opinion, most of the existing regimes in the continent cannot independently and reliably control. The large scale of organized crime, especially related to maritime piracy and theft of crude oil, remains a worrying factor , with damage estimated at $ 28 million in West African States alone.

Washington is particularly concerned about the possibility of international terrorist groups using the vast territories of the continent that are poorly controlled by national governments to set up training centers and weapons storage bases, as well as shelters for wanted militants. All of the above factors and potential threats are actively used by American politicians to justify the importance of the African direction of foreign policy in the overall system of priorities of Washington's military and political course.

The most effective tool for spreading American influence and control is the military assistance programs implemented by the Pentagon in those African states where the United States has stable military, political and economic interests. Such programs as the African Crisis Response Initiative, African Contingency Operations Training and Assistance, and Foreign Military Sales are mainly focused on the development of peacekeeping capabilities, anti-terrorist components of the African armed forces, and the export of military equipment, which, firstly, is in demand given threats and challenges. The United States should demonstrate to the international community the humanitarian orientation of its foreign policy aspirations.

* * *

Thus, the US administration attaches great importance to the implementation of its global policy goals on the African continent, which is strategically important in terms of the availability of energy resources and other mineral resources, and uses a wide range of tools and methods for this purpose.


Vishnevsky M. 1 The new President of the USA and Africa // Asia and Africa today. 2009. N 5. P. 147. (Vishnevski M. 2009. Novyi prezident USA i Afrika // Aziya i Afrika Segodnya. N 5) (in Russian)

Abramova I., Fituni L. 2 To Africa... business as always / / Mezhdunarodnaya zhizn. 2009. N 3. Pp. 145-160. (Abramova I.Fituni L. 2009. Competing for Africa's natural resources // International Affairs. N 3) (in Russian)

3 http://agoa.info/about-agoa.html

4 Zimenkov R. I. Trade and economic relations between the USA and Africa. Canada: Economy. Politics. Culture. 2011, N 4. pp. 63-78.

5 http://www.rusus.ru/?act=read&id=240

6 http://export.gov/africa/eg_main_055386.asp

7 http://www.opic.gov/what-we-offer/financial-products

8 http://www.exim.gov/products/loanguarantee/index.cfm

9 http://www.fas.usda.gov/sites/default/files/2013-12/gsm2013final.pdf

10 Ibidem.

11 http://agoa.info/data.html

12 http://www.rusus.ru/?act-read&id=172

13 United Nations. The Global Economic and Financial Crisis: Regional Impacts, Responses and Solutions. N.Y., 2009. P. 15-25.

14 USTR's Office of African Affairs. U.S.-Sub-Saharan Africa Trade Data - http://www.ustr.gov/countries-regions/africa

15 Ibidem.

16 http://www.mosap.ru/files/article/566/03-11.pdf

17 http://www.rusus.ru/?act=read&id=240

18 Ibidem.

19 http://www.inafran.ru/sites/default/files/page_file/urnov_-_politika_ssha.pdf

20 http://www.afrocom.ru/news/analytics/78

21 http://www.perspektivy.info/oykumena/amerika/torgovoekonomicheskije_otnoshenija_mezhd u_ssha_i_afrikoj_2011-05-12.htm

Fituni L. L. 22nd Place of Africa in the post-crisis world economy / / Asia and Africa Today. 2011, N 1. С. 15-20. (Fituni L.L. 2011. Mesto Afriki v postkrizisnoi mirovoi ekonomike // Aziya i Afrika Segodnya. N 1) (in Russian)

23 See more details: Kovalchuk A. P. How the world helps Africa overcome the crisis and increase the pace of economic development / / Asia and Africa Today. 2013, N 5. Pp. 9-17. (Kovalchuk A. P. 2013. Как mir pomogaet Afrike preodolet krizis i narashchivat tempy ekonomicheskogo razvitiya // Aziya i Afrika Segodnya. N 5) (in Russian)

24 http://www.oecd.org/newsroom/aid-to-developing-countriesrebounds-in-2013-to-reach-a n-all-time-high.htm

25 http://www.oecd.org/dac/stats/documentupload/EGY.JPG

26 http://itar-tass.com/mezhdunarodnaya-panorama/1272776

Fituni L. L. 27 Afrika v sovremennoi mirovoi sisteme tovarnoi torgovli [Africa in the modern World system of commodity trade]. 2013, N 3 (47). С. 148-154. (Fituni L. L. 2013. Afrika v sovremennoi mirovoi sisteme tovarnoi torgovli // Problemy sovremennoi mirovoi ekonomiki. N 3 (47); Fituni L. L. Differentiation of developing countries and the new architecture of the world economy (issues of theory). 2012, N 10. (Fituni L. L. 2012. Differentsiatsiya razvivayushchikhsya stran i novaya arkhitektura mirovoi ekonomiki (voprosy teorii) // Aziya i Afrika Segodnya. N 10) (in Russian)

28 http://www.perspektivy.info/oykumena/amerika/torgovo-ekonomicheskije_otnoshenija_mezh du_ssha_i_afrikoj_2011-05-12.htm


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