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Africa and the United States discuss the future of AGOA

10 October 2013

The US African Growth and Opportunities Act (AGOA) is scheduled to expire in September 2015. While President Obama has expressed “support for a seamless renewal of AGOA”, analysis from the South Africa-based Trade Law Centre, Tralac, suggests that “the appetite for a simple AGOA renewal for an extended period, or even making it some kind of open-ended preference scheme, has probably waned.” Africa is increasingly seen as a commercially attractive destination for exports.

Tralac notes that Mike Froman, the United States Trade Representative (USTR), and others have “alluded to the possibility of some form of reciprocity going forward…, citing the preferences that many AGOA countries are providing European firms under the yet-to-be concluded Economic Partnership Agreements (EPAs)”.

Speaking at the Addis Ababa AGOA Forum meeting in August 2013, the USTR declared that his department does “not want US firms to be put at a competitive disadvantage in the rapidly growing and dynamic African market”. It is in this context that “some US experts argue that the US should focus more on two-way trade agreements with Africa, particularly with more advanced countries such as South Africa, given the strong economic growth of that country in recent years.” The USTR is looking at “graduating products or sectors, and even countries out of AGOA preferences, especially where African export sectors are considered globally competitive”. In response, the South African government has stressed the importance of avoiding graduation, since any changes “should not divide and undermine regional integration initiatives”.

Overall, African governments are looking for:

  • “renewal of AGOA by 15 years”;
  • “capacity building to generate increased private sector engagement, not least in the area of sanitary and phytosanitary measures (SPS)”;
  • “enhanced political dialogue, including a summit-level meeting with the US in 2014”;
  • design and implementation of “national AGOA export strategies” and the development of an “AGOA financial compact for countries that have developed AGOA strategies”;
  • review and amendment of rules of origin “in sectors of high export potential”;
  • expansion of AGOA product coverage;
  • increased efforts to promote investment;
  • commitment to limiting preference erosion.

Currently, the US administration is planning a review of experience of AGOA, to examine “where exports are growing and why; whether AGOA-eligible countries have an export strategy and how AGOA can promote regional integration and spur diversification”. It will also look at rules of origin issues and SPS measures.

The USTR has pointed out that since AGOA was launched, Africa’s non-oil exports to the US have tripled. However, some analysts believe that AGOA has had “only limited impact on LDCs’ economic transformation, since key products such as dairy products, sugar, cocoa, peanut and cotton are excluded”. This limited product coverage of the AGOA scheme is a source of concern, with exports from LDCs largely concentrated in the clothing sector (e.g. exports from Lesotho, Malawi and Madagascar).

The EC for its part has argued that “EU preference schemes are better utilised than US preferences and that EU trade policy has generated almost twice as many imports as US trade policy”. 

Editorial comment

According to a June 2012 study from the Brookings Institution, agricultural products account for less than 1% of AGOA exports, with the benefits in the agricultural sector being constrained by quotas that pre-date AGOA and by the exclusion of some agricultural products from AGOA. The report concluded that the US needed to do more to address problems created by pre-existing quotas, product exclusions and SPS measures (see Agritrade article ‘US African Growth and Opportunity Act needs to do more for agriculture’, 27 August 2012). However, it is now an open question whether these kinds of reforms are likely in the absence of substantive moves towards reciprocity in trade relations between the US and Africa.

The pending implementation of EPA commitments across Africa is a growing matter of concern in the US, given the tariff advantages that these agreements provide to EU exporters. The situation in the poultry sector in South Africa is illustrative in this regard: in line with the government’s desire to establish a more comprehensive framework for insulation of the poultry sector from recent surge in poultry meat imports (see Agritrade article ‘ South African poultry sector problems compounded by rising EU exports’, 15 April 2013), South Africa’s International Trade Administration Commission is reviewing the scope for increasing applied tariffs on poultry meat within the bound ceiling.

It is recognised that, as a result of the provisions of the EU–South Africa Trade, Development and Cooperation Agreement, EU exporters would be insulated from any such moves. In the poultry meat sector, the provisions of this bilateral, reciprocal trade agreement clearly place US exporters at a distinct disadvantage compared to their EU counterparts.


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