An Africa United on Trade Faces U.S.’s One-on-One Tactics

(Bloomberg) --

The good news is that the U.S. doesn’t seem to make the often loathed assumption that Africa is one big country. The less good news is that its trade relations with the continent’s 55 states could become increasingly fragmented.

On his first trip to Africa as secretary of State this week, Michael Pompeo focused on business ties as he met with officials in Senegal, Angola and Ethiopia. President Donald Trump “loves deals” and “wants more to happen between the U.S. and nations all across Africa,” Pompeo said in Addis Ababa.

That came two weeks after Washington announced that it intended to start talks for a free-trade deal with Kenya. The only other such pact is with Morocco.

But on the same trip, Pompeo took a swipe at South Africa, the continent’s most-industrial economy and currently the U.S.’s biggest trading partner in the region. He said the plans of the country’s ruling party to allow land expropriation would be disastrous and described the policy proposal as an example of central planning that has failed in other African states like Zimbabwe.

Trade relations between the U.S. and African nations will come under increased scrutiny between now and 2025. That’s when the African Growth & Opportunity Act, which provides sub-Saharan African countries duty-free access for about 6,500 products to America, expires.

The Trump administration doesn’t favor renewing it and wants the planned Kenyan deal to be a model for other arrangements with individual countries.

But there’s an all-for-one, one-for-all pull in the opposite direction, with the African Continental Free Trade Agreement that’s been signed by all but one of the countries recognized by the African Union. A deal between the U.S. and Kenya could undermine this continent-wide commerce pact and limit Africa’s power to negotiate, according to the secretary-general of the United Nations Conference on Trade and Development, Mukhisa Kituyi.

“Kenya should not provide cracks in the armor of those who have pushed for further collective engagement,” Kituyi said in a joint statement this month with Erastus Mwencha, the former head of the Common Market for Eastern and Southern Africa. “There is strength in numbers.”

Charting the Trade War

An Africa United on Trade Faces U.S.’s One-on-One Tactics

The unprecedented gyrations caused by the coronavirus have hit the shipping business because 90% of all trade moves by sea and China has grown into the maritime industry’s main source of cargoes. The disruptions have left toy makers like Hasbro and fashion houses like the owner of Michael Kors, Versace and Jimmy Choo struggling with their supply chains. Vessels are idling. And exporters to China face diversions as clients there use force majeure clauses in their contracts to walk away from commitments to buy cargoes.

Today’s Must Reads

  • Coronavirus fallout | South Korea’s early trade data suggest the coronavirus epidemic has started to disrupt the region’s supply chains, and the effects are going global.
  • Deere in headlights | American farmers aren’t ready to heed President Donald Trump’s advice to buy bigger tractors after his deal with China, a new survey of their spending plans showed.
  • Quick turnaround | The shipping industry has run into headwinds ranging from China’s health crisis to poor weather. One CEO who oversees a fleet of 55 vessels expects a quick comeback.
  • Cattle drive | Australia overtook the U.S. to become the world’s top exporter of beef by value in 2019, aided by a 9% increase in export volumes. Brazil stayed the top shipper by volume.
  • Shell games | American farmers have deposed Iran as king of the global pistachio industry, benefiting from U.S. policies hostile to Tehran, climate change, and egregious failures of economic and water management.

Economic Analysis

  • Tracking the virus | South Korean import data highlight the coronavirus outbreak’s disruptions.
  • Brexit bargains | The U.K.'s lower-tariff plan should cut prices and raise competition.

Coming Up

  • Feb. 25: CPB World Trade Monitor; Hong Kong trade balance 
  • Feb. 28: U.S. advance goods trade balance
  • Britain’s departure from the EU on Jan. 31 marked the start of a new and, if anything, more complex phase of the negotiations. Click here for a timeline to the year ahead.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.