Where’s the Action? - Follow the transportation and logistics firms
You can tell where the business action is by the way transportation companies and other logistics providers behave. Moves this year by international air and ocean carriers are dead giveaways that West African commerce is heating up.
On March 1, for example, the Grimaldi Group, a leading operator of vessels that transport vehicles, launched direct service between the U.S. East Coast and West Africa, bypassing the traditional call at Antwerp, Belgium. With the new service, ships call at the ports of New York/New Jersey, Baltimore and Jacksonville, Fla. From there, they sail directly to Senegal, Togo, Benin, Nigeria and Ghana, with connecting service on Grimaldi vessels to West Africa, calling at ports in 14 countries. The service accommodates cars, SUVs and trucks, as well as construction and agricultural equipment of all sizes.
Grimaldi, the largest carrier of new and used vehicles between Europe and West Africa for almost 30 years, has a network of offices throughout West Africa. Its new vehicle terminal in Lagos, which was slated to come on stream this year, is expected to be the most modern of its kind in Africa for vehicle handling, storage and logistics.
Two months later, on May 12, North American Airlines announced the launch of direct flights from Baltimore to Accra, Ghana, and Banjul, The Gambia, eliminating the traditional stopover in Europe.
Just what is going on in West Africa?
For one thing, the Economic Community of West African States (ECOWAS) is implementing policies to facilitate the movement of goods within the region, as well as lower the costs of importing and delivering those goods. ECOWAS agreed in late May to progressively implement a common external tariff (CET), doing away with the more than 100 different levels of tariffs on imports and setting the stage for a regional customs union that bridges the French-English divide. Non-ECOWAS countries exporting to the region will pay a tariff of 20 percent on finished goods, 10 percent on intermediate inputs and 5 percent on basic necessities and raw materials. There will be no tariff on so-called social goods, such as medicines and publications. The result, U.S. officials say, should be more predictable costs for traders, faster customs clearance and reduced bureaucratic red tape, fraud and bribery.
All of this excites Jeremy Strauss, the trade and investment adviser with
the U.S. Agency for International Development’s West Africa Regional Program. “The implementation of the CET for West Africa is a critical step for establishing a free trade area in the region. … The work has resulted in unprecedented cooperation in trade, fiscal and customs policy by ECOWAS members. Such collaboration is critical to removing obstacles to doing business in the region,” he says. “Enterprises will take advantage of increased opportunities in the region and beyond,” he adds.
U.S. transportation interests no doubt also note the increased lobbying for a free trade agreement between the United States and Africa. Such an agreement would increase Africa’s access to U.S. markets, a huge benefit for those who import from the continent. At the same time, it would give U.S. corporations unfettered access to Africa’s markets, which United States and African free trade opponents say would hurt the continent’s emerging manufacturing sector.
U.S. officials are undeterred, however. It’s only a matter of time before a U.S.-Africa FTA becomes a reality, some argue. “We must find other ways to strengthen and deepen our trade and investment relations with African countries. We have several tools to accomplish this, including free trade agreements,” Karan Bhatia, deputy U.S. trade representative, said at an African Growth and Opportunity Act (AGOA) forum earlier this year.
Passed by Congress in 2000, AGOA eliminates U.S. barriers on most of sub-Saharan Africa’s exports to the United States. But for African countries to qualify, U.S. officials must first certify that they have liberalized their economies, privatized their public assets, minimized government interference in private business and created a U.S.-style legal system. To date, 37 of the 48 countries in sub-Saharan Africa have been designated as eligible for AGOA benefits.
“The U.S. should begin work now transforming AGOA into a free trade agreement by its expiration in 2015,” the authors of a Heritage Foundation report say. They add that Washington should require eligible nations to incrementally lower tariffs on U.S. imports beginning in 2010, with the target of eliminating tariffs on 95 percent of goods by 2015 and demand that eligible countries eliminate tariffs on essential medicines and medical equipment by 2007.
By Rosalind McLymont