U.S. Trade and Investment with Sub-Saharan Africa in Certain Sectors Has Grown and Continues to Have Potential, Says USITC

On May 30, 2018, the U.S. International Trade Commission ("USITC") released U.S. Trade and Investment with Sub-Saharan Africa: Recent Developments (Publication 4780 Inv. No. 332-564).

Rising per capita incomes, growing urbanization, the need for improved infrastructure, and expanding healthcare contributed to growth in U.S. exports in some sectors to sub-Saharan Africa (SSA) between 2010 and 2016, reports the United States International Trade Commission (USITC) in its publication U.S. Trade and Investment with Sub-Saharan Africa: Recent Developments.

The USITC, an independent, nonpartisan, factfinding federal agency, conducted the investigation at the request of the U.S. Trade Representative (USTR).  In requesting the study, the USTR noted that: “As the Administration works to encourage fair and reciprocal trade with our African trading partners, it is important to have factual information on where we are succeeding in African markets, where we have the greatest prospects for increased trade and investment, and the factors that could impede that progress.”  The USTR also asked for similar information on SSA's trade performance and on future prospects for its exports to the United States, including those under the African Growth and Opportunity Act (AGOA).

As requested by the USTR, the USITC report:

• provides an overview of U.S. exports to and imports from SSA of goods and services, as well as U.S. foreign direct investment (FDI) in SSA countries over the 2010-2016 period;
• discusses exports of goods and services from U.S. small and medium-sized enterprises (SMEs) to SSA, as well as challenges faced by them exporting to the region;
• performs a qualitative and, to the extent possible, quantitative assessment of the non-crude petroleum sectors and SSA markets that present the greatest potential for growth in U.S. exports and imports of goods and services, as well as FDI flows;
• profiles seven SSA economies; and
• summarizes recent developments in regional integration efforts in SSA, as well as strategies by AGOA countries to increase trade with the United States.

Highlights of the report include:

• Among the fastest growing U.S. exports of goods to SSA during 2010-16 were aircraft; floating oil platforms; natural gas and components; power generating equipment; and pharmaceuticals. Other sectors with the potential for increased  U.S. exports to SSA include motor vehicles, ethyl alcohol, poultry, and refined petroleum products. U.S. exports of financial services, insurance services, and information and communication technology services show potential for growth.
• The fastest growing U.S. imports of goods from SSA between 2010 and 2016 were cocoa, chocolate, and confectionery; apparel; refined copper; catalytic converters; and edible nuts. Growth in these sectors was due to the long-term renewal of AGOA to 2025, the increased presence of FDI in these sectors, SSA production cost advantages relative to other global suppliers, and expanding manufacturing capacity in SSA. Apparel, edible nuts, footwear, and raw cane sugar show potential for growth in U.S. imports from SSA under AGOA.
• In 2015, the latest year for which data are available, merchandise exports to SSA by U.S. SMEs were approximately $5.8 billion, a decrease from 2010. Over 40 percent of the 2015 exports were concentrated in South Africa and Nigeria. Some challenges faced by SMEs are high tariffs and poor protection of intellectual property rights.
• The stock of U.S. FDI in SSA declined from 2010 to 2016, with mining, including crude petroleum, being the largest destination sector. Sectors with the greatest potential for U.S. FDI in SSA are professional and business services, financial services, textiles and apparel, renewable energy, and mining. The three largest destinations for U.S. FDI in SSA in 2016 were Mauritius ($7.0 billion), South Africa ($5.1 billion), and Nigeria ($3.8 billion).
• To date, 15 out of 38 AGOA beneficiary countries have prepared specific strategies to identify sectors that have the potential to increase exports to the United States under AGOA. Many SSA countries are also a part of Regional Economic Communities working to lessen trade barriers that hamper AGOA utilization, with negotiations ongoing for a continental FTA.