AGOA Reauthorization Aims to Better Spread Benefits Across Africa
The 20th #AGOA Forum took place in Johannesburg from 2 to 4 November 2023 after a break due to the COVID. Started in 2000 as a program to boost sub-Saharan African exports to the USA, the present Africa Growth and Opportunity Act (AGOA) arrangement is set to expire in 2025. The trade volume under AGOA regime exceeded USD 46 billion in 2022.
This Forum saw the participation of some 30 African trade ministers as well as the captains of industry. The American delegation was headed by United States Trade Representative (USTR) Katherine Tai while the host country South Africa was represented by its Trade and Industry Minister Ebrahim Patel. The South African President Cyril Ramaphosa also made it a point to attend and delivered the welcome remarks during the opening session.
For the 20th edition, the main agenda was the extension and update of the AGOA. In a report issued by United States International Trade Commission (USITC), only a handful of countries have really benefited from #AGOA. Thus, 75% of non-hydrocarbon duty-free access products under AGOA actually come from just five countries, namely, South Africa, Kenya, Lesotho, Madagascar and Ethiopia. If oil is factored in, then the top African oil producers — Nigeria and Angola — would climb into the top exporters to US in terms of value.
At the end of September 2023, Congressman John Kennedy presented a bill in the Senate to extend the AGOA for twenty years until 2045. He justified the proposal on the grounds that “AGOA will help America to counter the mounting influence of China in Africa.”
In general, to be eligible for AGOA benefits, a country must adhere to certain values such as democracy, the rule of law and human rights. After evaluation and effective from 1st of January 2024, AGOA privileges will be stripped from four countries, viz, Central African Republic, Gabon, Niger and Uganda. On the other hand, Mauritania will regain eligibility for AGOA thanks to ‘substantial and measurable progress on worker rights and forced labor’, after its suspension in 2019.
The African countries put forward a number of suggestions as follows:
- Renew #AGOA for at least 10 years;
- Seek synergies between #AfCFTA and #AGOA; and
- Extend evaluation period from one year to three years.
SA Trade Minister Patel underscored that, taking oil aside, South Africa is by far the largest exporter to the USA with sales reaching ZAR 250 billion (USD 14B) in 2022. Actually, cars made in South Africa are one of the big sellers. He highlighted how South Africa has been able to leverage regional value chains in Africa to produce cars. To support his case, he pointed out that the wiring in the vehicles is made of copper from Zambia, the types are made of rubber from Cote d’Ivoire and the car seat covers come from Lesotho.
In a statement released by the White House on the eve of the kickoff of the AGOA Forum, US President Joe Biden reiterated his ‘strong support for the extension of the African Growth and Opportunity Act which forms the bedrock of the American economic diplomacy with sub-Saharan Africa. “I encourage Congress to reauthorize the AGOA in a timely fashion and to modernize this important Act for the economic opportunities of the coming decade,” he urged.