Bridges Weekly Trade News DigestVolume 15Number 22 • 15th June 2011

US, Africa Push for AGOA Extension at Tenth Annual Forum


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This year’s annual forum on the African Growth and Opportunity Act (AGOA) saw United States and African ministers and officials express an overall satisfaction with the current state of the US-Africa trade relationship under the bill. Officials on both sides are pushing for the US Congress to renew the bill prior to its expiration on 30 September 2015.

Hosted in Lusaka, Zambia from 9 to 10 June, this gathering marked the tenth meeting since the law’s May 2000 inception. This year’s forum theme was “Enhanced Trade Through Increased Competitiveness, Value Addition and Deeper Regional Integration.”

Many African countries already benefit from duty-free entry for some of their products under the US’s Generalized System of Preferences. However, AGOA expands upon that list of products for those sub-Saharan countries that meet the law’s eligibility criteria. While countries must be GSP-eligible to qualify for AGOA, achieving the former does not guarantee the latter.

According to the Office of the US Trade Representative (USTR), general GSP covers approximately 4,600 products; under AGOA, that number expands to over 6,400. The USTR estimates that that number accounts for over ninety-eight percent of the products that AGOA countries export to the US.

Thirty-seven sub-Saharan countries currently benefit under AGOA, with the Democratic Republic of Congo having recently lost its eligibility; the Obama Administration announced the decision in a presidential proclamation in December, which took effect on 1 January.

Room for improvement, despite trade gains

While Zambian President Rupiah Banda nodded briefly toward the painful effects that the financial crisis had on Africa, including delays in development aid pledges, overall he was optimistic about future prospects for the continent.

In his opening remarks, Banda hailed the gains that the US-Africa agreement had brought AGOA’s beneficiaries, noting that “it is on record that more than 300,000 jobs have been created in Africa with US$300 billion in export earnings and nearly US$30 billion in non-oil exports to Africa at minimal cost to the United States taxpayers.”

US Trade Representative Ron Kirk expressed similar optimism, noting that last year’s non-oil imports under AGOA showed an 18 percent increase from 2009, up to US$4 billion in 2010 alone.

Despite his positive tone, Banda emphasised that there remains room for improvement, such as shifting AGOA’s focus toward engaging in skills and knowledge transfer, and the need for a stronger push toward getting more agricultural products on US shelves.

Speaking on Washington’s behalf, Kirk agreed that AGOA could be better, and that improved market access was not the only tool for doing so. “All of us - US and African, governments, farmers, and business - must work closely to make AGOA better, to fulfil its yet unfulfilled promise and potential. We must get it right and aim to have the impact we’ve always known possible in AGOA’s second decade,” he said in his opening remarks

Kirk was joined by US Secretary of State Hillary Clinton in leading the American delegation to the AGOA Forum. Both made clear that the US would continue to support of the programme: Kirk, in his remarks, stated that “the United States is committed to promoting Africa’s economic growth through trade, and AGOA is a critical pillar in growing the US economic relationship with sub-Saharan nations.”

Clinton, who gave closing remarks at the Forum, reminded participants that the road toward obtaining US Congress’ renewal of AGOA would not be easy. She suggested that issues such as fighting corruption, improving regional integration, and accountability for results were all likely to come up in Washington discussions: “they will be asking tough questions like these, and I want us to be ready with answers.”

Clinton also noted that intra-African trade was far behind intra-regional trade anywhere else in the world. While she attributed part of that problem to infrastructure, she also pinned some of the blame on the pressure that trade officials face to protect domestic industries: “Government leaders of smaller countries are concerned that larger countries will gain too much influence. Business owners worry about losing out to competitors across the border.”

Despite the concerns Clinton mentioned, Kirk affirmed that the Obama Administration is committed toward pursuing Congressional renewal of AGOA beyond 2015, as doing so would “provide the predictability needed for US and African businesses, entrepreneurs, buyers, and investors.”

In a nod to Sudan’s January referendum that allowed the southern part of the country to secede, Kirk mentioned that he hopes Congress will add South Sudan to AGOA eligible list, once the new country is officially independent and has met the necessary inclusion criteria. South Sudan is due to gain its independence in three weeks, despite a recent surge of violence in the area.

Demonstrating further the US’ commitment to trade with sub-Saharan Africa, Kirk announced the African Competitiveness and Trade Expansion (ACTE) initiative - a programme that would devote US$120 million over four years toward the US Agency for International Development’s regional competitiveness hubs. The goal of this funding would be “to improve Africa’s capacity to produce and export competitive, value-added products and to address supply-side constraints that impede African trade,” Kirk said in a statement.

Kirk added that these hubs, which are in Bostwana, Ghana, Kenya, and Senegal, “help make African producers more competitive by tackling cross-cutting problems in finance, transport, governance, business environment, and telecommunications.”

Clinton, in an interview for public affairs show Africa360, highlighted the governance objectives of AGOA. Under the legislation, the US President must annually re-evaluate the eligibility of sub-Saharan countries for AGOA benefits. The criteria used for obtaining this eligibility include anti-corruption efforts, rule of law, protection of labour rights, poverty reduction measures, and having a market-based economy. In short, investments are conditional on meeting governance standards.

When questioned on the US’ stricter standards Clinton explained that the definition of good governance has become more nuanced over the last couple of decades; she clarified that the US’ goal is for investments in Africa to be sustainable, without “undermin[ing] good governance.”

ICTSD reporting; “Obama calls for ceasefire in Sudan,” AGENCE FRANCE-PRESSE, 15 June 2011.

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