The December 13–15 Africa Leaders Summit offers a great opportunity to reinvigorate U.S.-African economic relations, laying the groundwork to make them more strategically relevant for both sides. Sessions across the summit will review developments that are taking place in key sectors with the potential to fundamentally change the trajectory of Africa’s economic development. The best framework to both envision the broad potential of stronger U.S.-African economic relations and to focus on practical next steps is the (AfCFTA). AfCFTA is an ambitious program to create a more commercially integrated market across the continent, with common rules of origin, tariffs and trade procedures. Its goal is to triple the amount of trade between African countries as a means of creating millions of new jobs, increasing the competitiveness of African companies and the creation of value chains, which in turn will support manufacturing and industrialization. .
The scope of this undertaking is enormous, as it will form the largest free trade area since the establishment of the World Trade Organization and will incorporate countries with different levels of economic development and trade networks. Forty-nine countries have signed AfCFTA, and 35 have completed ratification. Trade negotiators are close to reaching the agreement’s threshold of agreeing to tariffs and rules of origin for 90 percent of goods and have set up dispute settlement procedures and a payments system across African currencies. In October, seven countries began a pilot program (guided trade), sending goods across borders under the new AfCFTA customs rules to identify practical issues that can stand in the way of trade. All this to say that African countries have taken significant steps to address companies’ concerns and foster the emergence of new value chains and economic linkages.
Africa is taking exactly the steps the U.S. government supports in its newly released Africa Strategy. The question is how the U.S. government and companies can best support this development.
- Clear indication of the U.S. government’s intent on trade and investment policy: Assuredly, U.S. government officials will reiterate their support for AfCFTA, which has been consistent since its inception. Further support for aspects of the negotiations (e.g., digital and services) may help African negotiators advance their next phase of negotiations. Spelling out the administration’s intentions toward individual Free Trade Agreements or investment partnerships and the upcoming 2025 expiry of the African Growth and Opportunity Act (AGOA) would provide important context. Announcing the posting of additional staff to African embassies, particularly with responsibilities for engaging on AfCFTA, would help sustain U.S. engagement.
- Support of trade and investment under AfCFTA: The proof of the pudding will be actual trade under AfCFTA. This is a great opportunity for U.S. agencies (e.g., the Development Finance Corporation, or DFC, Export–Import Bank of the United States, or EXIM, United States Trade and Development Agency, U.S. Department of Commerce) to hone existing trade and investment promotion tools, making them more agile and faster to better match innovations from our competitors. DFC and EXIM can also work with the African Export–Import Bank and commercial banks to make more lending available for African small and medium enterprises, which will get more companies involved while also creating new linkages for U.S. partners.
Laird Treiber is a senior associate (non-resident) with the Africa Program at the Center for Strategic and International Studies in Washington, D.C.
