Chapter 3 - Pearson Learning Solutions

CHAPTER 3 • REGIONAL MARKET CHARACTERISTICS AND PREFERENTIAL TRADE AGREEMENTS 101TABLE 3-14 SADC Income and Population2006 GNI(in millions)2006 Population(in thousands)2006 GNIper CapitaAngola $32,646 16,557 $1,970Botswana 10,358 1,858 5,570Democratic Republic of Congo 7,742 60,644 130Lesotho 1,957 1,995 980Malawi 3,143 13,571 230Mauritius 6,812 1,253 5,430Mozambique 6,453 20,971 310Namibia 6,573 2,047 3,210Seychelles 751 85 8,870South Africa 255,389 47,391 5,390Swaziland 2,737 1,138 2,400Tanzania 13,404 39,459 350Zambia 7,413 11,696 760Zimbabwe 8,016 13,228 620Total/Mean GNI per capita $239,724 218,940 $1,095**Indicates meanSource: Reprinted by permission of Warren Keegan Associates, Inc.Democratic Republic of Congo, and Seychelles are not participants). South Africa has been indiscussions with the EU about the formation of a free trade area; other SADC members are concernedthat such an arrangement would provide European global companies with a base fromwhich to dominate the continent. South Africa, Botswana, Lesotho, Namibia, and Swaziland alsobelong to the Southern African Customs Union (SACU). Another concern is war in the Congo,which threatens to have a severe impact on economic growth in the region. 23Marketing Issues in Africa000200010270740623In 2000, U.S. President George W. Bushed signed the African Growth and Opportunities Act(AGOA) into law (see www.agoa.gov). Created with the theme of “Trade, not Aid,” the law isdesigned to support African nations that make significant progress toward economic liberalization.Companies will find it easier to gain access to financing from the U.S. Export-Import Bank; AGOAalso represents a formal step toward a U.S.-Africa free trade area. One of the Act’s key provisionsgrants textile and apparel manufacturers in Kenya and Mauritius free access to the U.S. market upto a limit of $3.5 billion in exports each year. As Benjamin Kipkorir, Kenya’s ambassador to theUnited States, observed a decade ago, “Every country that has industrialized, starting from Englandin the eighteenth century, began with textiles. We’d like to do the same thing.”Under the Agreement on Textiles and Clothing negotiated during the Uruguay Round ofGATT negotiations, global textile quotas were eliminated in 2005. Nevertheless, the textile provisionin AGOA is controversial. The United States imports about $50 billion in textiles andapparel each year, much of it from Asia, Latin America, and Africa. Wary legislators fromtextile-producing states fear job losses among their constituents.Despite such initiatives, only about 3 percent of annual foreign direct investment goes to Africa.Still, some Persian Gulf states are creating closer ties with Africa, investing billions of dollars in keysectors such as infrastructure, agriculture, and telecommunications. For example, Dubai World, astate-owned company, is negotiating a deal in Nigeria’s energy sector that could be valued at severalbillion dollars. Dubai also funded construction of a container terminal that opened recently in23 Tony Hawkins and Michael Holman, “Trade Tensions Send Southern Africa Regional Link-Up Reeling,” FinancialTimes (September 2, 1998), p. 4.Global Marketing, Sixth Edition, by Warren J. Keegan and Mark C. Green. Copyright © 2011 by Warren J. Keegan. Published by Prentice Hall.