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US-AFRICA: AGOA 2.0 MUST EMBRACE AFRICA’S NEW COMMON MARKET

US-AFRICA: AGOA 2.0 MUST EMBRACE AFRICA’S NEW COMMON MARKET

The trade landscape on the continent has shifted since the African Growth and Opportunity Act (AGOA) began in 2000. The US-Africa relationship must do so, too.

The African Growth and Opportunity Act (AGOA) is set to expire in 2025. That may be the distant future for some, but given the time required to pass trade legislation in the US Congress, it’s the functional equivalent of tomorrow’s mid-day meal. Preparation for the post-AGOA trade relationship between the US and Africa needs to begin now.

AGOA has had important successes, but improvements need to be made to the programme.

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The legislation, which removed all tariffs on 6,400 products available for export to the US, helped to move the US-Africa relationship from aid to trade, from donor-recipient to one of mutual benefit and gain.

In return, the US required only that the nearly 40 participating African countries be making progress on economic and political reforms and pose no threat to US national security.

These conditions constituted a low bar as the number of AGOA countries has been relatively stable since the legislation went into effect in 2000.

In terms of promoting exports to the US, AGOA has had measured success. Some countries, such as South Africa, have benefited significantly. South Africa’s auto exports to the US under AGOA have created tens of thousands of jobs in that country and in the auto supply chain in neighbouring countries.

Apparel exports from other countries, such as Lesotho, Ethiopia, Mauritius, eSwatini and Kenya, have also created a similar number of jobs. These apparel exports are important not only for the jobs created but for the labels that say Made in Mauritius, Made in Lesotho and Made in Kenya, for example.

When apparel from AGOA-exporting countries are found by American consumers in their favourite stores next to clothing from Canada and Mexico, not to mention China, they begin to think about African nations as reliable and cost-effective suppliers to American households.

AGOA’s shortcoming is that not enough African countries have benefited on a scale that genuinely moves the needle when it comes to job creation, exports of apparel and how Americans perceive the continent.

The call by Congress in 2015 for all AGOA beneficiaries to develop export strategies to take advantage of the programme has borne little fruit as barely half of AGOA countries have created such strategies.

Yet other important benefits have been generated by AGOA. It put trade and investment at the centre of the US-Africa relationship, which the Trump administration is trying to deepen through its Prosper Africa initiative.

 

By Witney Schneidman

Head of Covington’s Africa practice, and a former US Deputy Assistant Secretary of State for African Affairs

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