----- Original Message -----
From: "Andy Mensah" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Tuesday, January 20, 2004 9:25 PM
Subject: [unioNews] Agoa's success proves its soundness


Jan 20 2004 08:09:57:000AM  Business Day 1st Edition
<H3>Agoa's success proves its soundness</H3>
Temba A Nolutshungu

THE advent of the African Growth and Opportunities Act (Agoa)
signified a paradigm shift in US foreign policy on Africa. Before, US
policies emphasised aid rather than trade, but Agoa makes trade the
cornerstone of US economic policy towards subSaharan Africa.

From the African perspective this is a major development, especially
as the record of western aid to Africa is dismal. Most aid in the
past has served only to prop up dictatorships. Little, if any, of
this aid reached the ordinary people .

There is a very strong correlation between economic growth and high
levels of transnational trade, and transnational trade is aided by
the removal of artificial barriers. The initial importance of Agoa
lay in its provision of duty-free and quota-free access to US markets
for sub-Saharan textiles and apparel. At present a much wider range
of products falls within the ambit of Agoa, and its reach is expected
to spread . While the offer of duty-free access to US markets is
nonreciprocal, the US benefits in terms of the creation of more
stable economies in Africa and the expansion of African markets for
its exports.

Agoa presents opportunities and challenges for both the private
sector and governments in countries that are participants or aspirant
participants. These challenges come in the form of explicitly
stipulated criteria for eligibility to be a beneficiary state, which
translates into immense opportunities for producers and manufacturers
of qualifying products. The criteria include maintenance of the rule
of law; a market-based economy; protection of private property;
institutional commitment to combating corruption; the right to due
process; equal protection under the law; and political pluralism. A
country has to comply with these criteria or show a movement towards
attaining them.

The effect of Agoa has been spectacular thus far, demonstrating the
wisdom of this policy. The following data (which are by no means
complete) illustrate the point:

African duty-free exports to the US grew 180% in 2001.

African exports to the US under Agoa exceeded $8,4bn in 2001.

Exports of specialised African goods, such as leather, lemon oil and
cut flowers increased exponentially.

US imports from Kenya, Madagascar and Cameroon all grew more than
1000% in 2001.

More than $1bn in new US investment in Africa has been created by
Agoa.

The precondition of compliance with the eligibility criteria empowers
extragovernmental interest groups. Non-governmental organisations or
individuals who embrace the fundamental principles of Agoa can use it
as a tool to persuade public policymakers in their own countries.

<B>Agoa is a sound policy because it is firmly grounded in the
principle of economic freedom. In the economic arena, when
individuals are free to make improvements in their socio-economic
conditions, to reap the rewards of their labour and to dispense with
them as they see fit, they become very productive. At the macro
level, the cumulative effects of these endeavours translate into
economic prosperity for the greatest number of people.</B>

To illustrate the point one needs only to look at Hong Kong, Japan or
Taiwan, countries that have no mineral resources whatsoever. In the
1980s, Hong Kong, which had a population of 5-million, produced and
consumed more goods and services than India, which at the time had a
population of 800-million. Contrast this with the fact that the most
richly endowed continent in terms of mineral resources, Africa, is
the poorest in the world.

The Economic Freedom of the World and Index of Economic Freedom
studies provide evidence of the correlation between economic freedom
and prosperity. It is very encouraging that, increasingly, African
countries have turned the corner by freeing up their economies very
significantly and as a consequence posting some of the highest
economic growth rates recorded globally.

***
Nolutshungu is director of the Free Market Foundation of Southern
Africa.

Copyright © 2004 BDFM Publishers (Pty) Ltd




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QUOTATION:

"All of us may not live to see the higher accomplishments of an African
empire, so strong and powerful as to compel the respect of mankind, but we
in our lifetime can so work and act as to make the dream a possibility
within another generation"
-<html><A HREF="http://members.aol.com/GhanaUnion/afrohero.html">Ancestor
Marcus Mosiah Garvey <i>(1887 - 1940)</i></A></html>

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