Establishing the New Triangular Trade

         From the 16^th through the 19^th century, the economic policy known as mercantilism promoted colonialism and imperialism throughout the world, using tariffs and subsidies to maximize developed country exports and minimize its imports.  Consequently, it promoted government regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers.  This is what motivated the so-called Scramble for Africa in the late 19^th century.  However, mercantilism’s greatest evil was its expansion of the millennia-old practice of slavery through the Transatlantic Slave Trade.  It is estimated that 12 million Africans lost their freedom through being kidnapped into this horrific practice.

            It is called triangular trade because it involved three legs: first, European manufactured goods were exported to Africa to purchase slaves, who in the second leg, were transported across the Atlantic Ocean – first to the Caribbean before dispersal to North and South America – then in the third leg, raw materials produced by slaves, such as cotton, sugar, rubber and tobacco were shipped back to European factories, where the cycle began once again.  Among the European centers of triangular trade were: Liverpool, United Kingdom; Bordeaux, France; Lisbon, Portugal; Seville, Spain, and Amsterdam, Netherlands, although other European countries were involved in the slave trade as well.  In Africa, slave centers were established in Arguim, an island off the coast of Mauritania; Elmina, Ghana; Sio Jorge da Mina, Sao Tome and Principe, and Lanzarotte, Canary Islands. These were among the transshipment points for Africans captured throughout regions in West Africa.  In fact, the area of coastal West Africa along the Bight of Benin that is located between the Volta River and the Lagos Lagoon was known as the Slave Coast. There also was limited slave shipments through the island of Zanzibar, now part of Tanzania. During the age of sailing ships, slave ships used the trade winds that brought them first to ports in the Caribbean such as Cap-Français in Saint-Domingue (now Haiti); Kingston, Jamaica, and Bridgetown, Barbados, before the Portuguese and Spanish shifted to Rio de Janeiro, Brazil; Cartagena, Columbia, and La Navidad, Hispaniola (now the Dominican Republic). Eventually, North American transshipment sites were established in cities such as Charleston, South Carolina; Philadelphia, Pennsylvania; Middletown, Connecticut, and Providence, Rhode Island.

This transatlantic trade process greatly enriched Europe and later the United States, facilitating their entry into industrialization.  Meanwhile, Africans were colonized and prevented from joining the Industrial Age.  The aftereffects of this system still plague industry-starved African nations, but by turning this historical abomination on its head, we can overcome these ill effects and raise the standard of living for people throughout the African Diaspora.

            The concept of a reconstructed triangular trade is not new, but some may be reluctant to use the concept because of its destructive history and legacy.  However, it would accurately describe a reconstructed system that no longer trades in human enslavement and prevents nations from developing industry.  In this era of independent nations led by Africans and Diasporans, such a system could enable mutual economic benefit for the nearly one billion Africans, nearly 100 million North Americans, the nearly 37 million in what we called AFRILAC (see previous blog post “AFRILAC Is a Real Phenomenon”) and the just more than nine million in former European colonial countries. Of course, such trade would not only be mutually beneficial for Diasporans, but also others with whom they choose to do business.

            There is significant wealth and expertise such a modern transatlantic collaboration could unlock that would be broadly beneficial.  For example, much of the raw shea nut trade goes through Europe, and buyers in North America purchase what Europeans don’t use, which usually is not of the highest quality.  What if investment in West Africa in shea nut processing occurred there, or they exported lightly processed shea nuts across the Atlantic for finishing?  The competition would be good for pricing of shea nuts for Africans, especially if investment allowed for value added production there.  Even if further processing were required on this side of the ocean, the product would be of higher quality for North American buyers.  That same paradigm would be true for other currently raw products from Africa.  This would accelerate industrialization in Africa and create more jobs and wealth on both sides of the Atlantic for Diasporans and others handling an increased amount of goods going back and forth.

            U.S. Customs and Border Protection (CBP) examines imports to ensure compliance with U.S. regulations on safety and security, whereas the Food and Drug Administration is responsible for sanitary/phyto-sanitary regulations and the Department of Agriculture’s Animal, Plant, and Health Inspection Service create regulations or provide licenses for imports into the U.S.  The U.S. Agency for International Development (USAID) currently works with these agencies to provide technical assistance on trade-related matters in sub-Saharan African countries.  The USAID Trade and Investment Hubs, established to facilitate African Growth and Opportunity Act (AGOA) implementation, would facilitate necessary training for African producers to ensure that they comply with U.S. regulations in production – for example, not using banned pesticides such as DDT on produce shipped to the U.S. or properly completing security-oriented documentation of export paperwork.  This not only reduces time processing non-compliant export products that are not eligible to enter the U.S., but training by these agencies could encourage and facilitate new entrants into trade through the AGOA process, which provides duty-free, quota-free access for 6,400 African products into the U.S. market through most of Fiscal Year 2025. 

Foreign Trade Zones (FTZs) are secure areas under CBP supervision that are generally considered outside CBP territory upon activation. Located in or near CBP-controlled ports of entry, they are the United States' version of what are known internationally as Free Trade Zones. The merging of FTZs with Opportunity Zones (formerly Enterprise Zones created to stimulate employment in distressed communities) occurs already, but currently are not focused on U.S.-Africa trade.  Such a focused merger could create U.S. jobs from handling African imports. Additionally, handling of U.S. exports prior to shipping could be conducted by the Opportunity Zone personnel, also resulting in an increase in U.S. jobs.  Workforce development training in Opportunity Zones usually is funded by state, county or city governments.  So, any work with Opportunity Zones likely would be locally funded, and depending on sectors and scale, private sector investment also could be brought to bear.  Investment in Opportunity Zones carry tax and visa benefits for foreign investors.

Value enhancement of African imports could range from addition of labels to transformation of products from their raw or lightly processed form.  This could be performed at the behest of off-takers or to usual industry standards.  Trained Opportunity Zone workers would handle value addition efforts as part of private sector processing/fulfillment operations within the FTZs.

The African Union (AU) reached out to USAID in 2018 when I worked there to assist in creating a linkage with Diaspora business associations in the United States.  To that end, the agency co-convened a meeting on 15-16 November of that year in Washington, DC. with the AU Mission to the United States.  At that meeting, Diaspora and Africa participants were eager to initiate business contacts. The point was made that the African middle class was estimated at 350 million people willing and increasingly able to purchase foreign goods and services out of a total population of nearly one billion.  The total African buying power, according to Harvard Business Review, was estimated to reach approximately $1.1 trillion by 2020.  Meanwhile, African producers could see a U.S. consumer market of 345 million people that already had a purchasing power of more than $11 trillion – the largest in the world. According to Nielsen, a global performance management company, the Diaspora population in the United States was expected to grow from the current 46 million to 74.5 million by 2060, and its buying power also was expected to reach at least $1.1 trillion by 2020.  African-born or first-generation members of this group already were seen to have economic roots on the continent of Africa and can be the leading edge of a growing American economic engagement with companies within African nations.  That doesn’t even consider resources that would be available from AFRILAC countries, who would enable the expansion of economic engagement with Africa through the entire Western Hemisphere.

In opening remarks at the Washington conference, H.E Ammon Mutembwa, Ambassador of Zimbabwe and Chair of the African Ambassadors Group, said: “There must be meaningful intervention between Africa and the Diaspora; we must go beyond remittances and develop larger financial instruments; we must mobilize financial resources here for investment in Africa; we must change the narrative and mobilize the Diaspora for Africa.”

The AU’s Citizens and Diaspora Directorate (CIDO) submitted a presentation that called for the leveraging of Diaspora resource mobilization, including through remittances, Diaspora bonds and investment funds.

That meeting was followed up by another USAID-AU Mission collaboration at a conference in Baltimore, Maryland, on 18 February 2020 – this time in conjunction with the State of Maryland.  Twice as many participants were on hand and heard from U.S. government agencies, AU officials and African diplomats and U.S. business associations and corporations about plans to use AGOA and the Prosper Africa initiative to stimulate U.S.-Africa trade.

In his welcoming remarks, the Charge d’Affaires (ad interim) of the AU Mission to the U.S, Tarek Ben Youssef said: “A strong trade and investment partnership between the United States and Africa is a shared strategic interest. The U.S. private sector is strongly invited to seize the opportunities Africa has to offer, particularly with trading under the new African Continental Free Trade Area.  Cities like Baltimore have an important role to play in international trade due to their resources, expertise, and links to the African Diaspora.”

Additional opening remarks were provided by the Honorable John C. Wobensmith, Maryland‘s Secretary of State, who said: “With the African Growth and Opportunity Act (AGOA) set to terminate in 2025, the Trade Conference captured the sense of urgency that now is the time to launch the next phase of trade and investment projects between the United States and Africa, one that supports small and medium-sized enterprises (SME), sustainable development, and an integration of African economies.”

To that end, there were a series of presentations by African diplomatic representatives from Algeria, Djibouti, Ghana, Mauritius, Morocco, and Zambia on trade and investment and procurement opportunities in their respective countries in areas such as port and road construction.  Discussions between the AU Mission, the African diplomatic community and USAID were set to begin on creating a one-stop platform for these and other African procurement opportunities, as well as trade and investment presentations. Within days of the end of the conference, there were more than three dozen professions of interest in U.S.-Africa business linkages.  Maryland officials and representatives of the Port of Baltimore and Baltimore-Washington Airport had begun discussions on facilitating direct sea and air linkages between Baltimore and points in West Africa.

Within two weeks of the end of the Baltimore conference, the COVID lockdowns began, and plans for CIDO to begin visits to the United States to discuss Diaspora linkage plans with U.S. government officials and representatives of Diaspora business associations were postponed indefinitely and haven’t been rescheduled more than 18 months later.  Maryland officials found themselves preoccupied with COVID recovery and still haven’t resumed transportation discussions or investment discussions involving the state’s pension plans.

When grand plans for Diaspora linkages are restored, they must also include AFRILAC entities and even Diaspora connections in Europe.  The reconstructed triangular trade should utilize all skills, all financial and technical resources and the goodwill and fraternal relations possible to again send goods and services between the Western Hemisphere, Europe and Africa – only this time, it will ennoble participants and not degrade them and enrich all sides and not lead to deconstruction of economies.