US-Africa Trade Falters as China Steps up

Africa’s international relationships are increasingly hinged on trade and investment rather than strategic security and aid, but attitudes in Washington are slow to change.

While many Africans were celebrating President Barack Obama’s re-election victory, arguably a more important leadership shift was taking place across the Indian Ocean. Xi Jinping, chosen by the Beijing elite to lead China for the next decade, may not be a household name outside of his home country, but he will be presiding over what may be Africa’s single most important strategic relationship in the 21st century.

China’s growing commercial engagement with Africa is now well-known. Trade has grown more than tenfold, overtaking U.S.-Africa trade in 2009, and is projected to reach $220 billion this year by some measures, up from around $166 billion in 2011. As other emerging economies such as Brazil, India and Turkey also scale up trade and investment relations with Africa, their focus is overwhelmingly on commerce, not security and aid.

While Europe and the U.S. continue to account for the majority of foreign direct investment to Africa, the gap is narrowing. The likes of Huawei and ZTE of China, Brazil’s Vale and India’s Bharti Airtel and Tata are planting roots across the continent. Washington’s response has been sluggish.

On trade, the landmark African Growth and Opportunity Act in 2000 has helped, providing duty-free entry into the U.S. for most of Africa’s exports. But volumes have fallen sharply recently, in part due to the global economic downturn. For the first half of 2012, total U.S. trade with sub-Saharan Africa was at $48 billion, a decrease of nearly a quarter compared to the same period in 2011. Moreover, many goods exported from Africa to the U.S. under AGOA are, in fact, made in China and transported via African platforms to the U.S. to take advantage of the AGOA framework, which has no “rules of origin” provisions.

Next to China, U.S. trade numbers look like small beer. And while Chinese firms can count on dedicated and focused state support, U.S. businesses are frustrated by what they see as a lack of interest from Washington in boosting trade ties with Africa. “Developing greater U.S. investment in Africa has not been the highest priority of this administration,” Stephen Hayes, president and CEO of the Corporate Council on Africa, told This Is Africa before the presidential elections.

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