10:00 A.M. EDT
MODERATOR: Good morning. Welcome to the Foreign Press Center. We have with us today Andrew Mayock, who’s the Deputy Vice President of Compact Operations for the Millennium Challenge Corporation, and Florie Liser, Assistant U.S. Trade Representative for African Affairs. They are here with us to talk about the African Growth and Opportunity Act. The AGOA Forum is scheduled to take place June 8th through 10th in Zambia, and Secretary Clinton is going to be in attendance. Ambassador Johnnie Carson is scheduled to arrive; he’s running a little late. But if he does come, he’ll give another brief statement. He may also dial in, depending on how his meeting goes.
So with that, I will just open it up to Ms. Liser.
MS. LISER: Great. Well, first of all, thank you very much for being here. It’s always a great opportunity to talk about how the U.S. is trying to use trade as a mechanism for increasing our relationship, our economic relationship with the countries in Sub-Saharan Africa. And I believe many of you know that AGOA, which was passed into law in 2000 and has now been in place a little over 11 years, was really a turning point in how the United States wanted to engage with Africa, not just through aid but recognizing that many countries in the world are only able really to take their rightful place in the global economy by being able to produce and ship competitively their products to the rest of the world. And AGOA was the tool that the United States used in order to be able to allow Africa a leg up, a competitive edge, in terms of being able to send African products to the United States.
We have now about $44 billion in exports from the African countries that are eligible – there are 37 that are eligible – to the United States in 2010. Much of that is oil, but that is not why we put AGOA in place. The Africans would be exporting oil regardless of whether we had AGOA or not. What we were aiming to do, and we believe we’ve been successful, is helping Africa to send to the U.S. value-added agricultural and manufactured products to the U.S. duty free, which were not eligible to come in prior to AGOA. And we now have about $4 billion in non-oil exports to the United States.
I can just tell you that, personally, traveling throughout the AGOA countries, visiting many of the factories, I have seen for myself the power of trade and the potential of AGOA to help Africa to really ship its products to the U.S. and to add value to its commodities. I have been to factories where thousands of workers are taking African cotton and making it into shirts and blouses and sweaters that are sent to the U.S. I have been to footwear factories where people are producing leather footwear and shipping it to the U.S., getting orders here. I have been to cut flower farms where we see that AGOA’s duty-free access for cut roses and other flower fillers is actually making a difference, especially for women.
So that is what we believe is the story of AGOA, not oil but non-oil, and the ability of Africa to add value to its own products, and instead of shipping them to other parts of the world for processing, to be able to process those products themselves there in Africa, create the jobs, attract the investment that’s needed.
The second thing, though, is we realize here in the U.S. that simply opening our market for African products was not and is not sufficient. And so, through the years, we have also provided technical assistance and trade capacity-building support because it’s one thing to open the door to the U.S. market – we’re a huge market, a $14 trillion market, and still the largest single-country market for Africa’s products. And we thought that opening the door was not sufficient. We needed to be able to reach back through the door and help African entrepreneurs and businesses to actually be more competitive – to help them understand the U.S. market, bring them to some of the trade shows that we have here in the United States, show them where the niches are that they can be competitive in this huge market. And as a result, they are shipping now to us more value-added food products – pepper sauces and jellies and jams and juices. They are shipping, as I said, footwear, toys, sunglasses and other eyewear.
And this is really the story of AGOA. And when we go to Lusaka, we leave – many of us – some have already left and many of us are on the way over the course of the weekend – we will be very excited to sit down with the ministers of trade and some foreign affairs and other ministers, as well as the U.S. private sector and civil society. They – you could come – in order to be able to have a high-level dialogue about where we go with the U.S. trade and investment relationship and how we can work together, all of us, U.S. and African, businesses and government, civil society, to really make the promise of AGOA fully realized. There is a lot of potential under AGOA, and we believe that Africa is at that point where they’ve been doing a lot of things in terms of reforming their economies, they’re growing at tremendous rates, they are markets that have huge potential for U.S. businesses, and we think this an excellent time at the upcoming AGOA Forum to talk about how we can truly enhance and grow the U.S.-Africa trade and investment relationship.
MODERATOR: And for those of us on the line, we were just joined by Ambassador Johnnie Carson. So good morning.
ASSISTANT SECRETRY CARSON: Thank you very much. Glad to be here. Sorry I’m late.
MODERATOR: Do you have a prepared statement or is –
ASSISTANT SECRETARY CARSON: I won’t, because I’m late and I know that people have been waiting awhile. Let me just say how pleased I am to be here this morning to say just a little bit about AGOA and to emphasize the importance that we in the Department of State have in trying to make AGOA a valuable trade and economic commercial benefit for Africans and for the African-U.S. trade relationship. AGOA is our most significant and important trade policy document. And we hope that by using this forum in Lusaka, we can help to promote greater trade between the United States and Africa. We believe that it is only through investment, trade, economic activity generated by the private sector that Africa will be able to realize its enormous economic potential. We want to be a part of Africa’s growth and Africa’s ability to realize that potential, and we hope that we can continue to work with African countries to utilize all of the benefits that exist under AGOA so that they can become more significant and active partners in trade with us but also significant and active trading partners in the global community.
MR. MAYOCK: Great. I’d like to thank you, the press in the room, for coming today and the press on the phone for joining us. I’d also like to thank the ambassador and the U.S. trade representative for our joint conversation with you here. Our CEO, Daniel Yohannes, is looking forward to joining Secretary of State Clinton and U.S. Trade Representative Kirk in Lusaka for the forum next week. Both those people are board members of MCC and important stakeholders in the Millennium Challenge Corporation. MCC’s presence here today, at the forum next week, and most importantly our ongoing work on the ground in Africa, represent the Obama Administration’s integrated approach to trade and development. MCC provides a significant asset in the U.S. partnership with Africa. Our institution’s core mission is poverty reduction through economic growth, and that’s at the core of the Obama Administration’s approach to trade and development.
The way this – the way MCC works in an integrated fashion with the State Department, with the USTR, with OPIC, with Ex-Im, and the other development partners is to provide significant investment in Africa. Over half of our 23 partner countries are African countries. Over two-thirds of our $8 billion of investment is in Africa, and over two-thirds of that investment is in support for trade, aid for trade. So MCC really provides additional tools in the U.S. toolbox to support this relationship, and I brought with me a couple key examples. Infrastructure is a big part of this, a big request for African countries’ support in trade. And under the Millennium Challenge Corporation, the investment is country-led. We follow the country’s request for what kind of development they are seeking.
So as an example, in Tanzania, where we have a $698 million program with them, there’s a couple of major, major pieces to that, one an almost $400 million transport project which is rehabilitating 430 kilometers of trunk roads connecting key places like the seaport of Tonga with the Kenyan border, upgrading an airport on Mafia Island, upgrading an additional 35 kilometers on Pemba Island, and providing funds for road maintenance to enhance Tanzania’s capacity to maintain the overall network. In addition to that, MCC is investing $206 million in energy in Tanzania to help upgrade the energy sector. In Benin, where there are inefficient port operations and aging infrastructure resulting in very high transaction costs at the ports, MCC is investing $171 million in turning around the port and providing trade support overall. This will provide an expansion and modernization of the port, which is going to reduce delays and have a significant impact on volume. It’s already having a significant impact on volume in the port as is. Mali’s another example, a landlocked company – country, as you know, that depends on air routes for trade. MCC is investing $180 million in an upgrade of the Bamako Airport. So you see across the African portfolio that MCC is able to work with our partners in the U.S. Government to help to provide the infrastructure to support trade, to support getting goods to market, and increasing exports.
We’re also looking forward to joining the Secretary of State and the U.S. trade rep in Lusaka, as Zambia is another country that MCC is working with and has a program in development. And we hope to bring this program to our board and these board members in December of this year and start a five-year Millennium Corporation program with Zambia in January.
Thank you very much.
MODERATOR: Thank you. And with that, we’ll open it up to questions. I just want to remind everyone to please state your name and media organization before asking your question.
QUESTION: I have two questions. The first one is – sorry. I’m from the Voice of America Portuguese Service. Regarding African exports, you said that there’s $4 billion in exports last year. Would you consider this after 10 years as something that the United States was expecting? It seems very little. I mean, has it really had an impact on the growth of exports from Africa to the United States, since 91 percent is oil?
And I don’t know if I can ask another question now.
MODERATOR: Go ahead.
QUESTION: Okay. The other question is: When the Millennium Challenge accounts approves – I’m taking the example of Mozambique. It’s obviously a country that (inaudible). They have a $500 million compact with Mozambique. I notice that not much of that money has been used. Why is that?
MS. LISER: Okay. So I probably should’ve been clear about it. First of all, there is – sort of total exports coming from Africa is actually 65 billion. Of those 65 billion, 44.2 billion comes in under AGOA and GSP duty free. And of that amount, 4 billion is just non-oil, just products which were – we consider non-traditional exports of Africa to the U.S. Now when we started AGOA, it was about 1 billion in non-oil exports.
So from where we sit, we believe that AGOA has played a major role in allowing the Africans to actually start producing value-added non-oil, non-extracted products to send to the U.S. market. And we know that that’s important because, if you look at how many of the other countries around the world – Asia and Latin America – have developed, they also started from a very low base in terms of their industrial production, the kind of products manufactured base. And we know that Africa has all of the natural resources and commodities, but part of the problem is that they’re exporting products at the low end of the value chain. And he only way that you are actually able to grow your economies in aggressive ways is that you take the raw commodities of natural products you have and you add value to it and you export at the high end of the value chain. And so that’s what AGOA is allowing the Africans to do.
But then, of course, the issue of being competitive is also very important because even when you produce the product, if your transport costs are high, if your energy or electricity costs are high – I have not visited one factory in Africa that does not have a backup generator. As soon as you have a backup generator, you’re eating up part of your competitive edge by sending that product to the U.S. duty free. So as we work with AID through our regional trade hubs to help these companies and MCC and others to basically – and State Department – to address some of the infrastructure and supply-side constraints, we know that the Africans are getting more competitive.
And truthfully, I don’t get upset when I go to a factory that has only a hundred workers because I know that if they have a hundred workers and they’re putting out products that are competitive in the U.S. market, they will get orders, and when we go back and visit that factory in another year, they’ll have 300 workers. And you have to start from somewhere, and that’s what we’re actually seeing.
MR. MAYOCK: And then as to Mozambique, you correctly note that the Mozambiquan investment in MCC appears to be lagging, two-and-a-half years into the five-year program, a strict five-year timeline that is part of the model that’s the Millennium Challenge Corporation. Approximately 15, 20 percent has been invested at the 507 million that you point out is the amount of the compact. That’s for two main reasons. One is the natural lag in the investment of infrastructure, so it take a while to get the designs done, the procurements done, and then go do the actual work of building the roads, building the water systems that are being built in Mozambique. So that tends to show up in a big way at the end of our five-year programs that are heavy in infrastructure.
Number two is Mozambique has been lagging a bit behind. We met with President Guebuza over the past quarter and MCA Mozambique has enacted an action plan to accelerate those investments, and Mozambique will have invested 85 percent, another $300 million, by the end of this year, which will put them – give them two years to complete the program. So it is getting back on track and it is looking like it is going to complete the full investment.
QUESTION: So they have to present the projects?
MR. MAYOCK: So they are right now actively procuring two major roads, a number of water systems, that will start to complete the investment that they sought to do in the first place and achieve the full $500 million.
QUESTION: Thank you.
MODERATOR: Wangui, do we have any more questions in the queue?
OPERATOR: Yes, we do. Please remember to press *1 to get yourself into the question queue. Please specify which speaker you would like to address your question in the interest of time, and please don’t forget to identify yourself and the media institution you’re affiliated to when asking a question.
Our first question will come from Accra, Ghana. Accra, Ghana, your line is open.
QUESTION: Okay. So I am Emmanuel K. Dogbevi. I work for GhanaBusinessNews.com. My question goes to Florie. I want to know how much Ghana has exported under AGOA to the U.S. in the first quarter of 2011. And how much has Ghana imported from the U.S. around the same period and what has come of this new policy? Thank you.
MS. LISER: Well, with 37 countries eligible for AGOA, I can’t say that I know off the top of my head, but Ghana actually is one of the countries this past year in 2010 that has actually grown significantly in its exports to the U.S. And we were in Ghana a few months ago and visited some new factories that have opened there, and so we know that there are value-added agricultural products that are coming to the U.S. Pineapples is one of the ones in that area. Also, they have gotten investments in Ghana in the apparel and textiles sector. And so Ghana’s exports of apparel and textiles to the U.S. under AGOA actually increased quite a bit over the past year. And we know that, in fact, most recently the minister of trade, Hanna Tetteh, had visited with several of the apparel manufacturers, and they are getting what we consider to be really good policy support from the Ghanaian Government in terms of the export trade zone and the ability to get access to space that’s needed as well as electricity and so forth.
So Ghana is actually one of the countries in 2010 that’s doing fairly well. I would end, though, by saying that Ghana is also a country that has tremendous potential beyond what we see now. And so we are thinking that in the next year or two, we’re actually going to see quite a significant jump in Ghana’s exports to the U.S. of non-oil products.
MR. MAYOCK: I would just add to that that Ghana is also an MCC Compact country with almost $550 million in investment, and almost half of that dedicated to trade, a number of that – a big chunk of that focused on roads in addition to agricultural productivity. And Ghana also has been a very high performer in executing the compact that is coming to a close in the early part of 2012.
MODERATOR: And before we leave, we have another question --
OPERATOR: Just to remind all the speakers once again, Ambassador Johnnie Carson, the Assistant Secretary for African Affairs; Andrew Mayock, Deputy Vice President for African Millennium Challenge Corporation, and the Assistant U.S. Trade Representative for African Affairs Florizlle Liser.
Our next question comes from Harare, Zimbabwe. Zimbabwe, your line is open.
QUESTION: (Inaudible) from (inaudible). I’d like to know what is the explanation to Zimbabwe’s continued exclusion from AGOA, despite progress under the (inaudible) agreement?
MS. LISER: Do you want to handle that one?
ASSISTANT SECRETARY CARSON: (Laughter) Go ahead. I’ll let you.
MS. LISER: Well, I think we should turn to Ambassador Carson for more on this, but I – we look very carefully at the AGOA eligibility criteria. I think you know that Congress set out some – what we think are really important criteria, many of which are in line with what Africans themselves tell us through NEPAD that they want to do: good governance, addressing poverty alleviation, opening markets, creating jobs, et cetera. And so in the case of Zimbabwe, as well as a few of the other AGOA – a few of the other Sub-Saharan African countries that are not eligible for AGOA, those that are not eligible have generally had what we call rule of law or governance issues.
And in the case of Zimbabwe at this point, I think that we are and will be looking at what has happened on the ground there in terms of addressing those governance and rule of law issues. And at any point that we are able to determine that a country has met its AGOA eligibility criteria, any day of the year there can be a recommendation that goes forward that they be made eligible. So we are looking forward to the time when Zimbabwe and others that are currently not eligible do meet the criteria. Our goal is not to keep countries out of AGOA but to get all the countries into AGOA.
OPERATOR: (Inaudible) for the next question.
MODERATOR: Do you have anything to add to that, Ambassador?
ASSISTANT SECRETARY CARSON: No, but let me just add, if I could, with respect to Zimbabwe, we would like nothing more than to see the global political agreement between ZANU-PF and the MDC fully implemented as quickly as possible. If that agreement were fully implemented and the government moved towards a new constitution and new elections, it would have a remarkable impact on the way we look at Zimbabwe and the way Zimbabwe’s eligibility for AGOA would be viewed. Zimbabwe’s last three presidential and parliamentary elections have all been highly contested and seriously flawed. That has called into question the commitment of the government to have good governance as a priority and democracy as a principle.
But as Florie pointed out, the idea is not to exclude countries from AGOA. We believe that it is important for all African governments to do as much as they can to promote the principles of democracy and good governance, and also to do as much as they can to strengthen their economies in order to foster sustained and long-term economic development. Right now, Zimbabwe falls short on those.
MODERATOR: We’ll go right here, to Williams.
QUESTION: Thanks so much. My name is Williams Ekanem. I report for Business World in Nigeria. And my first question is – has to do with the tenure of AGOA, which we all know is almost running out. And only yesterday, I got an information that it’s about to be renewed. So the question specifically is what’s on the table for the renewal, number one? And number two specifically to Ambassador Carson, you just came back from Nigeria over the weekend, and what’s your impression of the atmosphere there?
ASSISTANT SECRETARY CARSON: You want to do – I’ll do the second part first. I had an opportunity this past weekend to lead the presidential delegation from the United States to the inauguration of President Goodluck Jonathan. I think that the inauguration was the culmination of another step in Nigeria’s continued efforts to strengthen its democracy. In April, the government held three very successful elections for state governors, for national legislators, and for the presidency. Those elections were widely viewed as free and fair and creditable and reflecting the will of the people of Nigeria. But most importantly, they were a significant and substantial improvement over the elections of 2007, 2003, and 1999.
We think that Nigeria is one of the two most important states in Sub-Saharan Africa. It is the country that supplies the largest amount of crude oil of any country on the continent. The U.S. receives some nine percent of this crude oil from Nigeria, and the bulk of our low-sulfur sweet crude oil comes from that country. It is, after South Africa, the second largest source of U.S. direct investment, mostly in the oil and petroleum field as well as in oil services.
We think – we think that Nigeria has enormous, enormous economic potential. It can be one of the African countries that can make tremendous economic strides over the next decade under good governance, good leadership, good democratic leadership. There is an opportunity for Nigeria to be another Brazil, to be another Chile, to be an economic powerhouse on the continent. And we believe that under AGOA, we can provide opportunities that open our market to a growing number of Nigerian economic exports outside of the oil and gas sector.
It is important that a country like Nigeria, 160 million strong, be able to produce and manufacture more, to be able to grow and process more food products, that it, in fact, be able to realize that enormous economic potential that it has. So the reason for being in Nigeria to see President Goodluck Jonathan, we believe that the way to open up economic opportunity is through good governance, rule of law, but we also believe that we can contribute to this process through our efforts under AGOA as well.
OPERATOR: Press *1 if you’d like to get into question queue. Our next two questions come from Lusaka, Zambia. Lusaka, your line is open.
PARTICIPANT: Sorry Wangui. I – how much time do we have?
MS. LISER: Let me just say quickly on the issue of AGOA and what will happen next, I think all of us have been looking at this. We recognize that this is a cornerstone of a program and initiative that we have with Sub-Saharan Africa, and I think there is commitment in the Administration and Congress to certainly looking at how we can make it predictable. And so we are looking forward to the opportunity in Lusaka to talking with ministers about where we go.
I think one of the questions, though, that we have to answer is: When AGOA was first put in place in 2000, the world looked different and Africa looked different. And now in 2011 and by the time we get to 2015 when AGOA is scheduled to end, we do need to look at what are the new ways that the global economy is working; what are the new types of ways that we might be able to enhance our trade and investment relationship with Africa, not just through AGOA but more broadly? So we’re certainly looking at this issue of what happens to AGOA in 2015. We’re looking at it now. We’re not waiting until that year. But we’re also looking at are there things that we can do better? Are there ways that we can make sure that we’re not just extending the bill, but not necessarily seeing all of the benefits that we want to see out of it, and that’s why working through trade capacity-building programs and helping to put infrastructure in place is also important. We want to see AGOA well utilized.
MODERATOR: Wangui, if we could have just one question from the queue?
OPERATOR: Thank you. Our next question comes – two questions come from Zambia, Lusaka. Lusaka, your line is open. Lusaka?
Our next question comes from Ghana. Your line is open.
QUESTION: My name is (inaudible) from the Daily Dispatch, Accra, Ghana. My question goes to Florie. How would you rate Ghana in the value chain? That is to say, how is Ghana doing – well, how is Ghana performing in the value chain? And what is the reason or what are your reasons for your accession? Thank you.
MS. LISER: I think we touched on that a little bit earlier, but I’m happy to just say very briefly again that Ghana is one of the countries that is focused on a range of products. In our recent trip there, we visited a factory that is producing handicrafts and furniture for large stores here in the U.S. I probably shouldn’t mention names of them, but they are doing quite well in that sector. They’re doing well in terms of value-added agricultural products, and they’re doing well in terms of apparel and textiles. So in terms of adding value, we think that Ghana is doing a good job and, as I said earlier, we expect – if you look at their trade today and then maybe look at it in another year or two, I think that you will see that Ghana is beginning to realize more of its potential to export to the United States.
OPERATOR: Our next question comes from –
MODERATOR: Wangui, I think he have only time for one more question, so we’ll go back to the room.
OPERATOR: Yes. Okay. We only have time for one more question. Lusaka, Zambia, your line is open (Laughter.)
MODERATOR: Okay. I think we’ll just go with Adam.
QUESTION: Yeah. How do you do today?
MS. LISER: I’m fine. How are you?
QUESTION: Yeah. You know what? Last year you brought a lot of African entrepreneur ladies. What’s the outcoming of that? What – is there any feedback from the those ladies, how they’re doing inside the framework of AGOA? And Mali airport, when is going to finish? And you’re not building schools, university, or roads? Just the airport, and you’re still busy on that. What’s the next project in Mali? And what does Mali export to this country? And what is the future of Cote D’Ivoire in AGOA. Thank you.
MS. LISER: Oh my. That’s like – (laughter) – five questions. Okay. So the easiest one to start with is, in terms of Cote D’Ivoire, just to say what Ambassador Carson said earlier about Zimbabwe. We are looking carefully to see what they are doing now that they have resolved some of the issues that were there. And the private sector from Cote D’Ivoire is actually going to be participating in the AGOA Forum in Lusaka. And so we look forward, when we have the next AGOA eligibility review, which starts in the fall, to seeing where Cote D’Ivoire is and hopefully to being able to determine that they have met AGOA eligibility criteria and would become eligible again.
In terms of Mali, I think Mali is one of the countries where we haven’t seen as much as we would like, but one area that we know they are working on and it’s beginning to show some potential is in the textiles center. They had a huge order of bogolan bags to a U.S. card company. I don’t know that I should say the name. There was a lot of excitement about that, and there are many other products that are also being produced there. I visited a factory there that’s producing cotton yarn from their cotton which then was being sold actually to other countries in the region. So even though they weren’t using it themselves to make t-shirts, et cetera, they are moving up the value chain, and of course, Mali is a huge producer of cotton. So we see a lot of potential there for Mali.
QUESTION: Women, the entrepreneurs.
MS. LISER: Oh, the women, right. And let me end on the women. We were very excited last year to launch, for the first time, the African Women Entrepreneurship Program, AWEP. Secretary Clinton is a huge supporter of that initiative, as are all of us. I had an opportunity to meet with the women. It was really incredible, all of their energy. And hey have over the last year in their respective AGOA countries been going out and educating other entrepreneurs – mostly women, but also men – about what the opportunities of AGOA are.
And this year at the AGOA Forum, we will have another contingent of women entrepreneurs who are coming under AWEP to be with us in Lusaka and a huge Zambian program that has been launched for Zambian women entrepreneurs as well. So we are looking forward to continuing to work through that program as well as through all of our other trade capacity building programs – AID, trade hubs, MCC, the African Development Foundation, and work through OPIC and others – a trade development agency to try to make sure that not just the women but many entrepreneurs in Africa are able to take advantage of AGOA.
MR. MAYOCK: And as to the Mali compact and the airport, a couple of quick clarifying statements. One, the MCC model, a major principle of it is that the country decides what investments they’re going to partake. So it’s not a USG-led identification, but a government-led. So Mozambique has focused on roads and water. And Mali has selected as part of their development strategy to invest in the airport, and the airport is just a part of the overall Mali investment. So it’s a $461 million compact of which 181 million is focused on the airport. So there’s about approximately $300 million that’s focused on other priorities within Mali. That includes agricultural productivity and productivity in regional enterprises. So there’s a number of other investments that are going on that are important to the Mali economy, and again supporting African trade.
As to the completion of the Mali airport, you point out, as in Mozambique, under the MCC model, countries have five years to get this work done. The airport is on a tight timeline as expected for that to be completed. One of the good things about the MCC five-year timeline is it has a focusing effect for people to really bear down and get these projects done because, as people know, when that clock runs out, then that money runs out. So country to country, we’ve seen – we’re seeing it and we’re seeing it now that MCC compacts are ending. The first just ended in Cape Verde in Honduras last year in the spring and in Nicaragua and Georgia and Vanuatu. They – under severe time crunches, they actually were able to get the investments completed, and we expect that in Mali and in Mozambique.
MODERATOR: And with that, we are, unfortunately, out of time. I just want to thank Mr. Carson, Ms. Liser, and Mr. Mayock for taking time out of their busy schedules to come here. And thank you all for coming to the Foreign Press Center.
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