United States Seeks Enhanced Trade Ties with Africa

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The US-Africa Leaders Summit took place from December 13-15, 2022 in Washington DC, and featured top-level government-to-government talks, private sector engagements, and resulted in a number of trade-related outcomes pointing to enhanced trade and investment ties between the United States and African countries. While not explicitly addressed in the public portions of the meetings, China's massive investment in African industrial and digital infrastructure provided pointed subtext to the United States' economic overtures.

The private sector-focused segment of the Summit – the US-Africa Business Forum – was marked by announcements of new investments and initiatives totaling US $15.7 billion. Other trade- and investment-related announcements at the Summit included:

  • The United States will lend up to $21 billion via the International Monetary Fund to low and middle-income countries, to "support African resilience and recovery efforts";
  • Execution of a memorandum of understanding (MOU) between the United States and the African Continental Free Trade Area (AfCFTA) Secretariat (discussed below);
  • New Millennium Challenge Corporation compacts – large, five-year grants – to support regional economic integration and trade;
  • $369 million in new investments by the US International Development Finance Corporation, including related to renewable energy infrastructure
  • New financing commitments by the Export-Import Bank of the United States, including to support the export of US goods and services related to infrastructure, transportation, digital technology, and renewable energy projects;
  • The launch of the Clean Tech Energy Network, which will accelerate new power generation investments; and
  • New initiatives from the U.S. Trade and Development Agency to include $1 billion in financing for Africa's clean energy, digital, and healthcare infrastructure.

It was also announced that President Biden, US Trade Representative Tai, and other top US officials would travel to Africa in 2023, in order to sustain the momentum of the Summit.

African Continental Free Trade Area

On December 14, USTR Tai signed a MOU with the AfCFTA Secretariat. The three-year MOU establishes an annual high-level engagement between the United States and the AfCFTA Secretariat, as well as regular meetings of technical working groups "to exchange information on best practices and have an open dialogue to enhance the relationship between the United States and the AfCFTA Secretariat, the AfCFTA member states, and related stakeholders." The MOU states that areas of cooperation "may include" trade facilitation, digital trade, and regional value chain development.

The AfCFTA officially commenced at the beginning of 2021, as participating member states established a single market covering both trade and investment with a combined GDP of $3.4 trillion. The AfCFTA aims to eliminate tariffs on 90% of intra-African trade in goods, reduce non-tariff barriers, liberalize trade in services, develop mutual recognition of standards, promote inclusive and sustainable development, and facilitate the movement of capital and people between countries. The agreement is structured in stages, meaning it will evolve over time (more negotiations are planned in areas such as competition policy, investment, intellectual property rights and e-commerce). The AfCFTA incorporates and builds upon WTO agreements and disciplines, which is important, because 11 African Union members are not yet WTO members. Once fully implemented, the AfCFTA has the potential over time to increase intra-African trade by 52.3%, according to the UN Economic Commission for Africa (UNECA).

Fifty-four of the 55 African Union member states have signed the AfCFTA (Eritrea is not a signatory). As at October 2022, 44 of the 54 signatories (81.5%) have deposited their instruments of AfCFTA ratification (ordered by date): Ghana, Kenya, Rwanda, Niger, Chad, Eswatini, Guinea, Côte d'Ivoire, Mali, Namibia, South Africa, Congo, Rep., Djibouti, Mauritania, Uganda, Senegal, Togo, Egypt, Ethiopia, Gambia, Sahrawi Arab Democratic Rep., Sierra Leone, Zimbabwe, Burkina Faso, São Tomé & Príncipe, Equatorial Guinea, Gabon, Mauritius, Central African Rep., Angola, Lesotho, Tunisia, Cameroon, Nigeria, Malawi, Zambia, Algeria, Burundi, Seychelles, Tanzania, Cabo Verde, Democratic Republic of the Congo, Morocco, and Guinea-Bissau.1

Outlook

There is recognition amongst US policymakers that the United States is not immediately well positioned to challenge China's economic dominance in Africa. While the commitments announced during the Summit – which, in addition to the private sector-led initiatives, include $55 billion from the US government for a range of initiatives – represent a renewed focus on US-Africa trade and investment, the US government has been careful to not explicitly compare its approach to that of China. For example, in a pre-Summit press conference, National Security Advisor Jake Sullivan responded to a question about China-Africa relations by saying: "This is going to be about what we can offer … It's not going to be about other countries. It's not going to be attempting to compare and contrast." The Chinese government was not as delicate. On December 14, China's Foreign Ministry Spokesperson stated that "Africa is not a wrestling ground for major-country rivalry, still less a target of strong-arm tactic from a certain country or certain people."

Ahead of the Summit, US Deputy Secretary of Commerce Don Graves acknowledged that China was the largest investor in Africa, and that the United States "took our eye off the ball, so to speak, and U.S. investors and companies are having to play catch up." The level of follow-up engagement after the Summit will help determine if that dynamic will change.

The United States has focused its economic muscle towards the Indo-Pacific – another arena with clear implications for the US-China relationship – first through the Trans-Pacific Partnership, and currently through the nascent Indo-Pacific Economic Framework for Prosperity (IPEF), arguably at the expense of other relationships. Whether or not the United States has indeed taken its "eye off the ball" with respect to Africa, the government used the US-Africa Leaders Summit as an occasion to demonstrate a new level of focus and commitment to shoring up the economic relationship.

Click here for the White House press release.

Please let us know if you have any questions.

1 Status of AfCFTA ratification, The Trade Law Centre NPC (tralac), October 8, 2022, available here.

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