Nigeria and America’s Trade Policy with Africa

Nigeria and America’s trade policy with Africa

Eleven years ago, the government of the United States of America signed the African Growth and Opportunities Act (AGOA) to help the continent export some goods to the U.S. under certain concessions. Six years later, a report showed Nigeria fared badly in taking advantage of the U.S. initiative. A few days ago, a U.S. official spoke of an expanded initiative the Obama administration is working out with governments in Africa, of which Nigeria may benefit if it gets its acts right.

U.S. Deputy Trade Representative, Ambassador Demetrius Marantis, said in a statement a few days ago that the U.S. is pursuing a unique trade policy about new ways to resolve old trade barriers, create customs practices and facilitate job-supporting trade in which Americans and Africans could benefit. Specifically, he said the U.S. is engaging the Nigerian government on “protecting intellectual property rights in Nigeria”.

He said his government has set up Trade Investment Framework Agreement with 12 African countries and regional economic communities. Already, the U.S. is facilitating training on enforcement of intellectual property rights with Nigerian agencies. On trademark policies, the U.S. Justice Department is involved with the Nigeria Customs Service, Standard Organisation of Nigeria as well as Nigerian judges, especially on resolving commercial disputes through Nigeria’s tardy judicial process. Generally, any policy that helps to create jobs and trade opportunities is welcome.

But will the Nigerian government and the people properly analyze potential pitfalls and benefits and thereafter take advantage of benefits through formulating sound policies? After all, nobody or country designs a policy that will not first and mainly take care of their selfish interests, no matter the policy’s beauty. Before signing some agreements, are we sure we have something to offer in exchange of transaction in order to get the potential benefit? What is the attitude of the Nigerian government to preserving intellectual and property rights, and is it ready to make amends where possible in order not to make the benefits of any agreement one-sided, usually in favour of the U.S?
 

These posers are germane going by the record poor performance of Nigeria under the AGOA initiative. Under AGOA, sub-Saharan African countries were to be given some concessions to export 6,500 processed products, including textiles, to the US duty-free and quota free, to some extent. AGOA aims at reducing trade barriers and increasing exports from economically disadvantaged, poor countries and so position them to participate in a highly competitive global market. AGOA goals therefore are to ginger the governments of poor countries to provide the enabling environment to create jobs, improve living standards, reduce poverty and encourage foreign investors to consider investing in Africa. However, the U.S. still has power to limit importation of these AGOA goods from any country in order to protect its own producers and industry.

Till date, however, the US market yearns for Nigerian finished clothes, but the textile industry in the country has gone under. What with the crippling weight of scarce and expensive energy, epileptic power supplies, decrepit transportation and insufficient water infrastructure. The failure of government to reverse these disincentives to investments and profitability has over the years weakened the capacity of Nigerian textile and other firms to compete well in the fierce global market with far better infrastructure.

Dilapidated domestic infrastructure has made it virtually impossible for Nigerian firms to profit from the competitive advantage of having abundant agricultural raw materials to support and sustain a thriving, value-added agro industry that could profit from AGOA policy. For instance, South Africa’s benefits from AGOA six years ago came from export of passenger cars and citrus fruits.

Nigeria is yet to encourage an agro industry to exploit its abundant but wasting pineapple, orange, tomato, banana, mango in different parts of the country. While a fruit canning industry would support export of natural fruit juices, Nigeria spends outlandish sums on importing chemical fruit juices.

Fifty years after, crude oil export still remains crude, unrefined. Little or no value is added and so Nigeria gets peanuts for its huge exports. Yet, processing crude into finished products would give the country far greater revenue yield. Regrettably, Nigeria, a major global oil exporter, supplying about 15 percent of U.S. oil needs, still imports virtually all of its requirements for petroleum products, leaving all its refineries in decay and abandonment. All these inadequacies need to be urgently remedied before the country could benefit from any trade policy of this kind. We must be sure we have tangible commodities or products to exchange or Nigeria becomes a dumping ground for foreign goods, usually worthless. Our house must be put in order to attract foreign investors and for domestic investors to foray into foreign markets in a competitive global trade.

http://www.sunnewsonline.com/webpages/opinion/editorial/2011/may/31/editorial-05-31-2011-001.html