Africa’s exports to US could drop by half

As the US and Europe – which account for more than 60% of Africa's total exports – take an inward-looking trade policy stance as part of their economic rescue packages, African exports are set to drop by half, according to information released to FTW by the Trade Law Centre of Southern Africa (tralac). The export crash is expected to come from America's insistence on using its rescue package money to ‘buy local’ and a similar situation in Europe, where it is emphasised that rescue package beneficiaries should look to retaining local employment levels. This could hit African exporters hard – with the ‘buy American’ clause in US President Barack Obama's stimulus package requiring firms benefiting from the rescue money to source their raw materials from the domestic market. That’s the opinion of Chileshe Mulenga, an analyst with the Institute of Economic and Social Research at the University of Zambia, who told a workshop sponsored by the Commonwealth Secretariat in Zambia that these ‘buy local’ clauses would severely restrict African exports of primary goods to the US because they amount to new nontariff barriers to trade. “Should America go ahead to implement this policy, African exports to the US market will drop by half and gains that the continent has recently made under the African Growth and Opportunity Act (Agoa) will be reversed,” he added. The Swazi Observer reported that economists saw this ‘buy local’ pressure as a major reversal in the drive for an open global trading regime that has been the main driver of economic growth in the developing world over the past decade. Trudi Hartzenberg, an economist and executive director of tralac, agreed. She told FTW that demand for a new global financial architecture posed the threat of economic nationalism with a negative impact on the developing economies.