Assistant Secretary of Commerce and Director General Suresh Kumar
U.S. and Foreign Commercial Service
Remarks on the U.S. Trade Relationships with South Africa
Wednesday, March 10, 2010
Johannesburg, South Africa
As prepared for delivery
I am delighted to be here with you today in Johannesburg, leading the first U.S. trade mission of the Obama Administration to Sub-Saharan Africa. Joining me as part of my delegation are eight of America’s finest companies, representing a diverse range of industries.
President Obama has made it clear that he intends to vigorously support economic engagement with Africa. The President’s visit to Ghana and his speech to the Ghanaian Parliament are emblematic of our commitment to engage with Africa. Secretary Clinton’s visit to South Africa in August 2009 was also an important milestone in bilateral economic and political cooperation.
The reason for these visits is clear: The Obama Administration believes that Africa is an important partner to the United States and by building a deeper economic relationship, we will be building a stronger Africa and a stronger America.
Africa is 53 countries and 700 million consumers: we are confident that the prospects for growth are attractive, particularly in Southern Africa.
The key to this region, of course, is right here: South Africa, like India and China, is anticipated to grow at a faster rate than global averages.
U.S. trade with South Africa has expanded every year, until last year. Over the last 10 years, we have seen an almost 20% expansion in bilateral trade year over year, from $6.7 billion in 2002 to $16 billion in 2008. While long term prospects remain healthy, U.S. exports to South Africa fell 32% in 2009, and imports from South Africa dropped 41%. This can and must be turned around. Last year’s performance reflects the short-term impact of the recession. We now need to position ourselves for growing longer term, as the global economy recovers.
We must take full advantage of the African Growth and Opportunities Act (AGOA). This act offers all African countries – including advanced manufacturing countries such as South Africa – duty and tariff free access to the $14 trillion market in the United States, as well as our 300 million consumers. Exports account for 35% of South Africa’s economy, and U.S. trade and investment will reduce unemployment here in South Africa.
To further strengthen opportunities for trade, the Obama Administration has decided to continue to support the Millennium Challenge Corporation (MCC), which this year will execute $1.1 billion in infrastructure development grants in Sub Saharan Africa.
Many of South Africa’s neighbors including Lesotho, Namibia, Mozambique, Zambia, and Malawi are expanding their key economic infrastructure in partnership with the MCC. We hope that private sector South African companies will take advantage of this infrastructure to invest in these important regional markets.
I am pleased to note that just last week, there was a large MCC delegation to Johannesburg giving a presentation on contracting opportunities for South African firms … and their potential American suppliers. We want South Africans to bid on these projects – especially in partnership with American suppliers. This will expand both U.S. and South African exports and also deepen regional integration.
The U.S. Government vigorously supports regional economic integration in Africa, in part, because it is good for American firms. We know that regional economic integration will lead to more growth. We know that faster growth will lead to more trade and investment. This investment will create jobs in both America and Africa.
The investment relationship between South Africa and the U.S. is also vibrant. American investment in South Africa constitutes a considerable percentage of industrial output in South Africa. A recent American Chamber of Commerce survey indicated that the turn-over of American companies in South Africa constitutes about 9% of South Africa’s total GDP. We estimate that there are about 700 American companies with a presence in South Africa. American companies employ more South Africans than companies of any other country.
I can also say with pride that more Americans have purchased tickets for the FIFA World Cup soccer matches in South Africa than residents of any other foreign country. We are hopeful that this event will be a harbinger to rapid expansion of trade and investment in the future.
At the Department of Commerce, we recognize fully that investment usually follows trade. We invest only after we have established strong trading relations. We therefore put much effort into expanding our bilateral and multilateral trading networks. That is why I am leading this trade mission from the U.S. to bring together American exporters with buyers in South Africa to strengthen commercial engagement at all levels.
President Obama’s recently announced National Export Initiative brings together all U.S. federal agencies into a one-stop shop orientation, making it easier than ever before for businesses to engage – the U.S. Trade and Development Agency for feasibility studies, Export-Import Bank for financing, the U.S. Trade Representative for trade negotiations, and the International Trade Administration, through the U.S. & Foreign Commercial Service, for trade promotion.
The implementation of the National Export Initiative by the Department of Commerce in the African context is not without its unique challenges. Africa is 3 times larger than the continental United States, but, it is divided into over 50 nations. To be trade friendly, African nations must:
- Harmonize tariffs;
- Encourage the free-flow of products through its various ports;
- Develop road and port corridor infrastructure; and
- Have transparent trade policies and processes.
Notwithstanding these challenges, some of our Africa-specific trade expansion plans are as follows:
- We will promote American trade shows in Africa and use those events to highlight African growth and opportunity in the American market;
- We will pursue tendering opportunities on behalf of American companies;
- We will work with our South African and SACU government colleagues to implement the Trade, Investment and Development Cooperation Agreement;
- We will step-up our cooperation with other agencies of the U.S. Government, particularly the Export-Import Bank, Overseas Private Investment Corporation, Millennium Challenge Corporation, and Trade and Development Agency;
- We will put special emphasis on agricultural productivity and green industries, as there is so much potential growth in both of these sectors; and
- We will continue to work with franchise and direct selling associations to try to stimulate entrepreneurship and new business formation in Africa.
We are excited about our mission to Africa and are optimistic about developing robust business opportunities in the future. Therefore, it is no coincidence then that this mission to Africa is the first trade delegation I have led since the start of my tenure in the Obama Administration only two weeks ago.
Africa’s 700 million consumers deserve better opportunities, better access to U.S. products and services, better access to U.S. technology that can improve infrastructure, and that will ultimately provide better standards of living on the continent.
America’s 300 million consumers must have access to more African products – that is why AGOA was established.
America stands for free and fair trade that benefits everyone. We have every expectation that African economies will grow rapidly in the future, and we look forward to participating in this growth with you.
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