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U.S. Trade Representative on Obama’s Trip to Africa

26 June 2013

Office of United States Trade Representative
Remarks by United States Trade Representative Michael Froman to the U.S. Global Leadership Coalition
June 25, 2013

As Prepared For Delivery

“Good afternoon. Thank you, Nancy, and thanks to everyone at the U.S. Global Leadership Coalition for your commitment to advancing global development and promoting U.S. engagement abroad. This is one of the most effective coalitions in Washington, one which understands that economic growth and development abroad is key to greater security and prosperity here at home. I’ve enjoyed working with many of you over the past four-plus years, and look forward to continuing our work together as USTR.

“In fact, this is my first public appearance since being sworn in as USTR, and that’s important to me because as the President has made clear, trade and investment are critical components of our development policy. To achieve sustainable development, we need trade, not just aid; investment, not just assistance.

"Tomorrow, President Obama will go to Africa. I wanted to take this opportunity to talk about his trip, how it fits into our broader development agenda and our larger economic agenda, including promoting growth and jobs here at home. We all know the good news: there’s been a step change in growth in Africa in recent years and the potential for future growth – particularly outside the resource sectors – is greater than it has been in our lifetimes. Trade within Africa is up, as is trade between Africa and the United States. And there is still tremendous upside potential. Today, private investment flows to Africa substantially exceed foreign aid.

“Africa wants investors, especially American investors. They like the fact that when American companies invest, they hire, train and promote local staff, they invest in the communities and they’re focused not just on taking resources out of the continent, but putting resources into the continent as well. And American investors are beginning to take up the challenge. They’re investing in Africa and they’re investing in Africans – $39.5 billion in U.S. foreign direct investment in sub-Saharan Africa by the latest figures.

“On the ground, in more and more countries, entrepreneurs are finding paths to prosperity – and stability for their families and communities – through exports. I’m talking about people like GM East Africa’s Rita Kavashe – the first non-expat to become Managing Director of a major multinational business – who inspires young people across the continent to aim high and dream big. She inspires people like the woman I met in Dar who has successfully turned her single sewing machine into a global fashion business that supports her family and many more in her community, or the family I met in Addis who grew their local salt business into a major global supplier of nutritional supplements that provides jobs and a more secure future for their children and countless others. In villages, towns, and cities across the continent success stories like these are emerging every day – especially among the young people that the President hopes to speak to directly during his trip.

“The stars are aligned in Africa for sustained economic growth and substantial reductions in poverty. More leaders are investing political capital in their countries’ economic futures and mobilizing their own resources to put behind education, economic development, and transforming public health. Investors – foreign and domestic – are showing more interest in putting capital to work as the enabling environment improves. There is a renewed and serious focus on regional integration and expanding intraregional trade to speed trade flows to, from, and within Africa. There is increased consideration of linking the existing free-trade areas into a tripartite or continent-wide free trade area, to create larger markets and economies of scale that can improve Africa’s global competitiveness. In country after country where PEPFAR is doing its work, the tide of HIV and AIDS is receding. And we are seeing gains in democracy, transparency, anti-corruption and the rule of law – all key ingredients that attract investment. There is a long way to go, but we have come so far.

“Indeed, much of what the President will be doing on this trip – from meeting with jurists about the rule of law and governance to conferring with leaders about some of Africa’s key security challenges – is tied back to trade and investment as key drivers of Africa’s economic growth story, and how it not only helps Africans – especially the continent’s surging youth population – but also creates jobs and exports and growth back here in the United States. Keeping that context in mind, I’d like to talk to you today about a few of the key areas the President will focus on in Africa.

“Let me begin with food security, as the President’s first stop in Africa will be Senegal, a key partner in our Feed the Future Initiative and one of the countries preparing to join the New Alliance for Food Security and Nutrition which President Obama launched at the G-8 Summit at Camp David last year. There, he’ll meet with Ministers of Agriculture, NGOs and agricultural entrepreneurs to discuss what needs to be done, including through Feed the Future and the New Alliance, to spur greater agricultural productivity.

“Feed the Future focuses on smallholder farmers, particularly women, and supports partner countries in developing their agriculture sectors to spur economic growth that increases incomes and reduces hunger, poverty and under-nutrition. This program reflects the President’s commitment to achieving concrete results: in Senegal and the 18 other focus countries, Feed the Future has helped more than seven million smallholder farmers adopt improved agricultural technologies or practices; and it has brought nearly four million hectares of land under improved cultivation and management practices.

“The New Alliance aims to achieve sustained and inclusive agricultural growth and raise 50 million people out of poverty over the next 10 years. It combines the commitment of countries in the region to reform their agricultural sector with the commitment of donor governments to use their foreign assistance to support these reforms and use the tools they have to facilitate private flows of capital, which in turn leverage significant private sector investments commitments. The New Alliance has already raised more than $3.7 billion in private sector investments and more than $1 billion in NGO commitments to African agriculture and has expanded from three countries to nine with more, like Senegal, poised to join this year.

“Now, let me be clear: These commitments are generally not philanthropy, not corporate social responsibility – as important as those are. They are hard-headed, for-profit, market-oriented, risk-adjusted return-oriented investments. If we are to achieve sustainable development, it is our view that investment must be the driver. In Africa, we want to seed the next round of BRICS, the emerging emerging economies which will not only be able to lift their own people out of extreme poverty, but contribute to global growth as well.

“The New Alliance is in certain respects a model for our development policy, combining government reform, donor support and private investment. It’s an approach that can inform other sectors as well, and I’ll have more to say about energy and power in a moment, but its animating spirit is the need to mobilize capital. We’ve taken that to heart in the Obama Administration. In the last four years, we have committed more than $7 billion in supporting private investment and trade – $3 billion in investments from the Overseas Private Investment Corporation and $4 billion in trade finance from the Export-Import Bank.

“This weekend, in Johannesburg, Valerie Jarrett and I, together with Fred Hochberg and Elizabeth Littlefield and Lee Zack, will convene a high-level dialogue with leaders in banking and finance across Africa to further discuss how to mobilize capital and improve the bilateral investment climate. Building on this meeting and his meetings in Senegal, the President will convene a CEO roundtable in Dar es Salaam and give a major speech to a Business Forum on how trade and investment fits into our overall development agenda and Africa’s rise.

“In Tanzania, the President will outline the Administration’s comprehensive strategy to promote trade and investment between Africa and the United States. The East Africa Community will be a preliminary focus of this strategy, but we will also seek to work with other regional economic communities in Africa, and ultimately to support their efforts to create a continent-wide, integrated market.

“Right now, red tape, roadblocks and redundant border procedures create lengthy transit times which can make trade with and within Africa prohibitively expensive. To compete globally and grow through trade, African countries need to work together and with their international trading partners to break down barriers to the free flow of goods and services. The EAC has already made the difficult decision to create a customs union. Now comes implementation.

“Under our strategy, we will work to help integrate the EAC market, move toward single border crossings, harmonized customs systems, and better border infrastructure. Because having access to markets has little value if you can’t get your products there on a competitive basis. So, we will work to increase EAC competitiveness, including by providing targeted technical assistance and capacity building at the local level and will transform our trade hubs into trade and investment centers to provide information, advisory services and tools to encourage investment and two-way trade. As Africa becomes a more attractive market, we expect to see an increase in our exports and the jobs associated with them here at home.

“When we think strategically about development, we look for force multipliers – cost effective initiatives that can have an outsized impact on economic growth. Trade and investment are clearly force multipliers. So is access to power. Right now, more than two-thirds of the population of sub-Saharan Africa is without reliable access to electricity and more than 85 percent of the rural population lacks access. And yet the region is also discovering vast reserves of oil and gas as well as a significant potential to develop clean geothermal, hydro, wind and solar energy.

“Imagine the impact that widely available power would have: on education, for children to be able to read at night; on health, for caregivers to be able to refrigerate vaccines; and on productivity, if farmers can charge their cell phones and get real-time access to market prices for commodities.

“While in Tanzania, the President will visit the Ubongo power plant. There, he will discuss our efforts to work with those African governments that are willing and ready to make the reforms in their energy and power sectors to attract private investment and to ensure that energy resources are responsibly developed and effectively deployed. And this isn’t just about big power plants. It’s about innovative ways to deliver power through mini-grid and off-grid solutions too.

“As with trade, this is a sector that links Africa’s economic fortunes with our own. There are U.S. companies poised to help Africa develop its energy resources responsibly, to build their power plants, to sell them turbines and other equipment – promoting jobs, exports and growth here at home. This is a win-win situation for all involved. Two generations ago in the United States, rural electrification helped to power the growth and development of communities across our country. Today, America can help Africa seize its energy potential for the 21st century and beyond.

“Finally, any discussion of U.S.-Africa trade has to be grounded in the African Growth and Opportunity Act (AGOA). AGOA is the centerpiece of our trade policy with sub-Saharan Africa. It reflects both Congress’ critical role in the formulation of U.S.-Africa trade policy, and the value we all place on strong economic relationships with our African trading partners. Since its inception in 2001, we’ve seen a three-fold increase in non-oil exports from beneficiary countries to the United States under AGOA. Those exports are estimated to have created as many as 1.3 million jobs in Africa. More broadly, AGOA has enhanced African economic growth and stability, and improved the business environment to the benefit of both African and U.S. firms and investors.

“Yet we know there is still more we can do to build on AGOA. That’s why the Administration committed earlier this year to intensify discussions with Congress and our trading partners, as well as U.S. and African stakeholders, on how to ensure that AGOA achieves its potential as we look to its seamless renewal before it expires in 2015. We’ll have a great opportunity to discuss our shared goals for AGOA’s future this August at the AGOA Forum in Addis Ababa.

“Let me leave you with a final thought about why the President is returning to Africa this week. A decade ago, The Economist declared Africa a ‘hopeless continent.’ More recently, they published a cover on an Africa Rising. In this Administration, we believe in Africa’s progress and its potential, but we know that it is fragile and uneven. We know that today’s gains could be lost tomorrow without adequate support and institutionalization. We want to be on the side of those working to make the gains irreversible.

“We’re on the side of that woman in Dar. We’re on the side of that family in Addis. And we’re on the side of every government official and civil society activist promoting good governance and striving to make democratic institutions work.

“There is much work to do ahead to keep Africa on the rise. This is a long game. And President Obama and his Administration are very much committed to this effort. I know the U.S. Global Leadership Coalition will do its part as well. Thank you very much.”