Open Letter to African Economic and Trade Ministers: There’s a Trump in your future, like it or not

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    Dear Ministers,

    Over the past several months, many people around the world have
    been fixated on the surpassingly strange events now taking
    place in Washington, DC. Not surprisingly, these political
    shenanigans have occupied first place for many, monopolising
    the attention of the media and leaders around the world, many
    of whom must surely be asking, “But what does it all mean?”

    After all, it is highly unusual to watch a national leader in a
    democracy as he picks public fights with virtually the entire
    mass media of his country – accusing them all of issuing “fake
    news”, as he squabbles publicly over how many
    people actually showed up at his rallies and
    speeches, having his utterances interpreted by his subordinates
    in their meetings with other world leaders, and spending his
    time sending insulting and belittling social media messages
    (complete with their apparently deliberate misspelled words,
    all caps, and unusual grammatical constructions) to anyone who
    irritates him.

    Moreover, it has been highly unusual for a newly installed head
    of government to be forced to remove a key adviser just days
    after being appointed to office – and there is the possibility
    lurking out there that there will be yet more such embarrassing
    events in the days just ahead. Truly, events like these have
    been absorbing attention worldwide, using up all the oxygen in
    the room and driving from the limelight practically every other
    world event, regardless of its magnitude. This may not be fair
    to everyone else, but then the American president – especially
    one who is just settling into office – is no ordinary world
    leader. And Mr Trump has been giving us a great deal of
    evidence that he is no ordinary president.

    However, beyond all the unprecedented fun and frolics in
    Washington, the Trump administration has actually made some
    decisions that will now have real consequences beyond America’s
    borders, as opposed to the soap opera playing nightly on
    television news broadcasts. Unfortunately, most foreign
    governments, and Americans alike, have probably overlooked
    those decisions – even though the consequences may be enormous.

    Like most of your ministerial colleagues, you have taken
    reassurance in the fact that the American Congress passed a
    10-year version of the African Growth and Opportunity Act
    (AGOA) last year. This American law – as you undoubtedly
    understand but as many of your citizens and your nations’ media
    may not – is not a treaty negotiated between America and the
    various African nations. That means its passage did not require
    years of difficult, tense negotiations in a large, unwieldy
    international forum or in a long and tedious series of
    drawn-out technical meetings. However, because it is solely US
    law, it could conceivably be changed by a simple act of the
    American Congress. And, of course, it will come to an end
    naturally in 2026. No one in Washington expects it to be passed
    yet again – Americans are in an increasingly protectionist mood
    and the most protectionist American of all is their new
    president.

    Its passage gave entrepreneurs and exporters from your
    continent an unparalleled opportunity to send thousands of
    products to the US with no tariffs or duties imposed upon them.
    While many African nations have been unable to make maximum
    usage of these opportunities, South Africa and several other
    nations – especially oil producers – have made good use of this
    part of the American legal framework.

    Depending on how one counts such things, I understand that
    almost $2-billion a year’s worth of exports flow from South
    Africa to America, duty free, and there are many tens of
    thousands of well-paying, highly skilled jobs as a result,
    especially in the processing of high-end agricultural processed
    goods and the manufacture of motorcars and car parts.
    Naturally, much more could be exported this way to America, but
    here, the onus is largely on African producers to make the
    kinds of products American consumers wish to buy.

    Naturally, too, there have been disagreements that have come
    along that have become associated with AGOA in the minds of
    many people. In South Africa, for example, there have been some
    “unpleasantnesses” over American exports of chicken meat, with
    Americans insisting South Africans had failed to treat American
    birds equally with those being shipped from Brazil and several
    EU nations, while South Africans charged that American
    exporters were trying to “dump” their unmarketable chicken meat
    in South Africa after strong-arming things.

    But, important, this tussle wasn’t part of the actual fabric of
    AGOA. Rather, by virtue of domestic politics it became a
    stumbling block that had the potential to prevent South
    Africans from benefiting from AGOA access, unless some
    accommodation was made for American chicken exports. (Now, of
    course, there is a new argument about whether such imports from
    the EU, Brazil, and now America are starting to cause serious
    problems for local chicken producers. But maybe such issues –
    and the economic adjustments that will take place – are all
    part of the cost of allowing or encouraging one’s nation to
    participate freely in the global economy.)

    Going forward in the Trump era, of course, is the point that
    protectionism is increasingly going to be part of American
    trade policy too – and other nations will need to make some
    adjustments to this. They won’t have all that much choice,
    given the size of the American economy.

    The first real harbinger of this shift has come along just the
    other day, on March 1, when the Trump administration filed a
    required yearly report to Congress on its trade policy. The
    text of this report makes for some sobering reading, if one is
    a foreign government official, sounding, as it does, very
    different from the kinds of ideas that were behind the original
    passage of AGOA.

    This report reads in part, “President Trump has called for a
    new approach, and the Trump Administration will deliver on that
    promise. The overarching purpose of our trade policy – the
    guiding principle behind all of our actions in this key area –
    will be to expand trade in a way that is freer and fairer for
    all Americans. Every action we take with respect to trade will
    be designed to increase our economic growth, promote job
    creation in the United States, promote reciprocity with our
    trading partners, strengthen our manufacturing base and our
    ability to defend ourselves, and expand our agricultural and
    services industry exports.

    “As a general matter, we believe that these goals can be best
    accomplished by focusing on bilateral negotiations rather than
    multilateral negotiations – and by renegotiating and revising
    trade agreements when our goals are not being met.

    “Finally, we reject the notion that the United States should,
    for putative geopolitical advantage, turn a blind eye to unfair
    trade practices that disadvantage American workers, farmers,
    ranchers, and businesses in global markets.

    “In addition to these basic principles, we will focus on the
    following key objectives:

    1. Ensuring that US workers and businesses have a
      fair opportunity to compete for business – both in the domestic
      US market and in other key markets around the world.
    2. Breaking down unfair trade barriers in other
      markets that block US exports, including exports of
      agricultural goods.
    3. Maintaining a balanced policy that looks out
      for the interests of all segments of the US economy, including
      manufacturing, agriculture, and services, as well as small
      businesses and entrepreneurs.”

    Media reporting on this document began with words like this
    Reuters article,

    “US President Donald Trump’s administration said on Wednesday
    that it will take aggressive action to combat other countries’
    unfair trade practices and may defy World Trade Organisation
    rulings that it views as interfering with US sovereignty. In an
    annual trade policy agenda document, the US Trade
    Representative’s office said the administration ‘will not
    tolerate’ unfair trade practices that distort markets,
    including currency manipulation, unfair government subsidies,
    intellectual property theft and state-owned enterprises.”

    This Reuters story went on to note,

    “ ‘Unlike earlier presidents, Trump is signalling a willingness
    to impose import restrictions – especially against a country
    like China – where the justification under WTO rules for doing
    so may be highly questionable,’ said Chad Bown, a senior fellow
    and trade expert at the Peterson Institute for International
    Economics in Washington [a leading economics think tank]. ‘The
    downside of the United States going down this path is
    that  it is likely that other countries will follow suit
    immediately,’ Bown added.”

    This is dramatically different from the kind of altruism that
    was part of the original motivating purpose for AGOA in which
    it was understood that giving African exporters an extra
    advantage was good for African economies, and that such
    benefits would ultimately generate positive impacts for
    political stability and democratic practice.  Once Robert Lighthizer is
    confirmed as the US Trade Representative, a cabinet-level post
    whose office is usually the key trade negotiator for the US,
    you can expect that, as the new report said, “The Trump
    administration will aggressively defend American sovereignty
    over matters of trade policy.”

    Lighthizer, of course, was a deputy USTR back during the Reagan
    administration, central in negotiating import quotas on
    Japanese goods back in the 1980s, with the help of some
    powerful trade law provisions that have generally been unused
    after the WTO was launched more than 20 years ago.

    All this means that people in jobs like yours are in for some
    really challenging times. But if you wait until the Trump
    administration begins to insist on some serious quid pro
    quos
    from African nations – or else – on trade, the
    imbalance of power and economic heft will inevitably be to your
    disadvantage. (The Trump administration, after it takes on
    Mexico, China and several other places, may just happen to
    notice that South Africa runs a trade surplus with the US, for
    example.)

    And so, the crucial task, now, will be for African economic and
    trade policy officials like yourselves to become much more
    active – in advance of demands made by the Trump administration
    – in identifying a continental agenda for dealing with those
    Americans. President Trump has frequently argued that he
    dislikes and distrusts multilateral agreements like the
    proposed TransPacific Partnership, arguing that America has
    given away far too much in such negotiations and gotten far too
    little in return (in part, too, because American negotiators
    were too soft and undemanding in their efforts, as well as the
    craftiness of their opposite numbers).

    But this will be hard work for representatives of the nations
    in Africa to go toe to toe with the Americans on trade. And it
    will be much more difficult than at previous times when the
    prevailing views in America on globalisation and trade were
    profoundly supportive of such things. Now, any potentially
    successful agenda for the continent in dealing with America on
    trade must take into conscious consideration and demonstrate
    the real potential for tangible, mutual benefits, rather than
    those useless, flaccid geopolitical payoffs that have just been
    derided in that most recent USTR report.

    The alternative, however, would be increasingly awkward and
    difficult for the nations of the continent. While it is easy to
    think this is something that can be safely put off to be dealt
    with in a few years time – after all, AGOA has nearly a decade
    left to run – remember that the SACU-EU trade partnership
    negotiations took almost a decade to achieve agreement and even
    a South African-Canadian agreement apparently took seven years
    to conclude. If you and your fellow officials wait for years,
    things may be too far along the way, given an America in its
    current protectionist frame of mind, to achieve anything useful
    – and the Trump administration may simply end up offering “take
    it or leave it” terms instead.

    What’s at stake? Most obviously, there is the continuation of
    duty-free/tariff-free exports to America by African nations’
    growing economies. Then there must be consideration of
    investment protection and promotion, as well as an effective
    commitment to protect intellectual property rights. Beyond
    these, there must be measures to promote greater labour rights
    and the avoidance of products made by child, prisoner or
    coerced labour. Additionally, there should be an agenda that
    focuses on supporting entrepreneurial partnerships and
    promoting ways of making cross-border trade an essential part
    of this overall agenda.

    The Trump administration is going to be consumed with its
    economic and trade dealings with China and other parts of East
    Asia, as well as Mexico and Canada (as the other two members of
    the North American Free Trade Association that he also wants to
    renegotiate), at least for a while. Africa will be largely
    ignored in that period, especially given the many
    still-unfilled positions in the State Department and elsewhere
    in government. There is only so much that understaffed offices
    can cope with.

    That means there is a window of opportunity for African nations
    to develop their own agenda for a trade discussion with America
    – but only if all the cards are put on the table, and if there
    are real offers being made. Donald Trump deeply believes he
    earned his stripes as a top-tier dealmaker in the dog-eat-dog
    real estate world of New York City and that he will turn this
    set of skills and instincts towards improving the deal
    Americans get in their relationships even as all those abroad
    are eager to take advantage of American generosity – or
    gullibility.

    This means there is a chance for some real deal-making between
    America and Africa, but only until the Trump administration
    turns a basilisk eye towards African trade, after jousting with
    the trading partners he has already called out. And, of course,
    such an effort would be in the interests of African nations,
    producers, exporters and everyday citizens. But leaders must
    move quickly to take advantage of this window of opportunity.
    DM

    Photo: President Donald J. Trump reacts after delivering his
    first address to a joint session of Congress from the floor of
    the House of Representatives in Washington, DC, USA, 28
    February 2017. Traditionally the first address to a joint
    session of Congress by a newly-elected president is not
    referred to as a State of the Union. EPA/JIM LO SCALZO

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