THE WHITE HOUSE
Office of the Press Secretary (Abuja, Nigeria) ________________________________________________________________________ For Immediate Release August 27, 2000 FACT SHEET The United States and Nigeria: Expanding Trade and Investment
President Clinton today announced new initiatives to expand trade and investment between the United States and Nigeria in a speech before U.S. and Nigerian business representatives. These measures, which include duty-free access to the U.S. market for many Nigerian products and new financing arrangements for Nigerian importers of US products, complement other initiatives announced during the President's visit to deepen the economic partnership between the two countries. These include support for debt relief, assistance to broaden access to education and information technology, and a reinstatement of direct air travel between Nigeria and the United States. His remarks on trade capped a day of business agreement signings and a Commercial Dialogue involving senior private sector and public officials from the two countries.
GSP Trade Benefits on Nigerian Products. The President announced that Nigeria will be added to the list of developing countries whose exports to the United States receive duty-free status under the Generalized System of Preferences (GSP) program. The GSP program provides nonreciprocal tariff preferences to developing countries in order to promote their economic growth and development. More than 4,650 products from approximately 140 designated beneficiary countries qualify for this treatment. Access to the GSP program will help Nigeria expand its export base beyond oil, which accounts for 95 percent of export receipts.
To promote economic diversification, the government has created export processing zones, reduced average tariffs from 24% to 12%, and identified priority products for export promotion. Of these, the following would qualify for duty-free treatment under GSP: Electrical and Electronic Products; Leather Products; Plastic Products; Rubber Products; Garments; Metal Products; Sports Equipment and Materials; Biscuits and Confectioneries; Paper materials; Food Processing; Pharmaceutical Products.
The United States is Nigeria's top export market, accounting for 44% of its export earnings. In 1998, the United States imported $10.5 million in agricultural goods and $3.8 million in textiles and apparel from Nigeria. The elimination of tariffs under GSP will increase the demand for such products as cocoa, cotton, handmade traditional textiles, minerals and metals, and forest products. US tariffs currently range from 2% to 20% on these products.
Nigeria is also being considered for eligibility under the recently enacted African Growth and Opportunity Act, which will confer duty-free treatment on virtually all products exported from qualifying Sub-Saharan African countries, including those ineligible for such treatment under existing GSP product limits. Under this law, African beneficiary countries will enjoy the freest access to the US market of any not part of a Free Trade Area (Canada, Mexico, and Israel). The legislation has the potential to generate billions of dollars in new trade and investment between the U.S. and Africa.
President Obasanjo considers Nigeria's participation in the African Growth and Opportunity Act a centerpiece of his national economic strategy to alleviate poverty through expanded and diversified trade and investment. In July 2000, an inter-ministerial committee reporting to the Vice President was established to oversee Nigeria's qualification for and implementation of the Act.
Since President Clinton signed the African Growth and Opportunity Act into law on May 18, 2000, the Administration has been preparing implementation of the Act. President Clinton is scheduled to announce countries eligible for benefits under the Act in early October and apparel products eligible for duty/quota free treatment in December 2000.
To maximize the commercial potential of GSP and the Africa Growth and Opportunity Act for Nigeria, the President also announced new measures to expand financing and promotion of trade between the two countries:
U.S. Export-Import Bank. Eximbank announced several important new initiatives to finance trade between the US and Nigeria having the potential to facilitate billions of dollars of additional commerce:
Master Guaranty Agreements. Ex-Im Bank has entered into partnership arrangements with four Nigerian banks under the Master Guarantee Agreement. Through these agreements, Ex-Im Bank guarantees loans and guarantees made by Nigerian banks to Nigerian borrowers for purchases of U.S. goods and services. Nigeria is only the second market in Africa whose banks have been approved for these guarantees. The partnership created with these Nigerian banks under the Agreement will help local businesses access financial capital for purchasing goods and services to grow the Nigerian economy. Project Incentive Agreement ("PIA"). Exim Chairman James Harmon signed a PIA with representatives of the Nigerian government and Central Bank that will create an efficient vehicle for financing infrastructure projects in Nigeria. Under the PIA, the Nigerian government will commit to issue all approvals necessary for the establishment and operation of a payment account for specialized transactions, permitting the transfer of U.S. Dollars freely out of Nigeria and the purchase of U.S. Dollars in a free and lawful market in Nigeria. The PIA includes security arrangements, utilizing hard currency commodity export contracts, such as those generated by oil and gas exports sales. A major benefit of the PIA is that it gives the Nigerian government an opportunity to show the international business community that it is willing to work with the private sector to facilitate more trade, commerce, and investment to support the Nigerian economy. $6 million Guaranteed Loan to the Government of the State of Jigawa to purchase U.S. equipment for a broadband wireless internet network. A five-year loan made by First International Bank to finance the purchase of a broadband wireless internet access network from TeleCommunication Systems, Inc. of Annapolis, Maryland will be guaranteed by NAL Merchant Bank (a Nigerian financial institution) and the Ex-Im Bank. Ex-Im Bank support for this project is important because it constitutes the first medium-term Ex-Im Bank guarantee approved for a Nigerian buyer in almost ten years. Moreover, this is a project in the telecommunications sector and involves a Maryland-based African-American-owned business. Department of Commerce. The Department of Commerce will: a) establish a second Foreign Commercial Officer in Lagos, Nigeria in March 2001, augmenting the current Foreign Commercial Service complement of one Senior Commercial Officer and five Foreign Service Nationals; b) support a trade mission to the United States by 40 to 50 members of the Nigerian American Chamber of Commerce which will visit New York, Chicago, Houston, Atlanta, and Washington, DC between October 14 and 25; and c) undertake a $1.2 million Commercial Law Development program of technical assistance and training to support efforts to establish a legal framework for the private sector that will improve investor confidence, open markets, and help to build democratic institutions. U.S. Trade and Development Agency. TDA is an independent U.S. agency that funds feasibility studies, consultancies, training programs and other business project planning services in emerging market countries. After years of inactivity in Nigeria, TDA signed its first grant agreement July 26, 2000 for an important sugar industry feasibility study project in northern Nigeria. TDA has also recently approved funding for projects totaling over $1.6 million for expansion of Nigerian use of domestic natural gas, refinery modernization to produce upgraded fuels for the Nigeria market, development of a major new cement factory, and management of the radio frequency spectrum for telecommunications access. These commitments could lead to the development of nearly $1 billion in investments in crucial economic sectors: Sugar Industry Development Feasibility Project - Bauchi and Jigawa States. This cost-shared feasibility will be performed to determine the potential for two new cane sugar factories and estates. Development of the sugar industry has been given high priority by both the Federal Government, for domestic food needs, and Jigawa and Bauchi States for local economic development. Nigeria Gas Corporation (NGC) Increased Gas Utilization, nationwide. This feasibility study grant, to be competed among U.S. firms by the parastatal NGC, will examine the best markets and uses for presently flared Nigerian natural gas, in particular pipeline extension and increased gas use for power generation, LPG and compressed natural gas. Warri Refinery and Petroleum Company (WRPC) Modernization, Warri, Delta State. This feasibility study, to be competed among U.S. firms by WRPC, will examine the best refinery upgrade investments needed to produce additional petroleum products for the Nigerian market. New Cement Factory Feasibility, Kogi State. This cost-shared study will be performed to determine production and market feasibility for a new private cement factory in central Nigeria. This project would offset some 1 million tons of imports annually. Recognizing the importance of the project, Kogi State will be sharing the cost of the study with TDA. Frequency Spectrum Management. This technical support and feasibility study, to be competed among U.S. firms by the Nigeria Communications Commission, will provide rapid assistance on how Nigeria can most effectively manage the frequency spectrum to expand wireless telecommunications access.
Treasury Department. The U.S. and Nigeria signed an agreement under which the Department of the Treasury will provide technical assistance to the Nigerian government in the areas of budget and fiscal policy as well as government debt issuance and management.
State Department. The State Department will post an additional Foreign Service Officer in Nigeria to work with federal and state governments, Niger Delta communities, and private companies to improve coordination in their effort to ensure that the people of the region benefit from Nigeria's economic resources development.