TRALAC - Trade Law Centre

Nigeria: Retooling AGOA trade policy to boost export

Thursday, 19 April 2018 Published: | TAIWO HASSAN

Source: New Telegraph (Nigeria)

Nigeria has lots of trade agreements with many economic partners meant not just to strengthen bilateral trade cooperation, but also to see that the agreements are of win-win situation.

Some of the trade treaties are, however, not making any significant inputs to the economy and therefore due for periodic review.

Though, some may be tedious and deliberately made difficult for review by the more favoured partner(s).

However, there is no doubt that it is time for the Federal Government to have a second look at past trade agreements that are considered injurious to Nigeria’s socio-economic interest.

AGOA treaty

For stakeholders in the industrial sector of the Nigerian economy, one of the key economic treaties that is currently at the front burner for the Federal Government to take a closer look at is the African Growth and Opportunity Act (AGOA) treaty, which is yet to make value addition to the country’s economy at the international stage.

AGOA is a bilateral trade arrangement aimed at increasing US trade and investment with sub-Sahara African countries.

The trade treaty, which was signed into law in May 2008, provides access to the US market for more than 6,400 products from sub-Saharan African countries even though Nigeria is yet to benefit much from the it.

FMITI view on AGOA

At an industry forum on impact of AGOA in Abuja a few days ago, the Deputy Director, Trade Department, Federal Ministry of Industry, Trade and Investment (FMITI), Mr. Aliyu Abubakar, highlighted that a draft strategy had been developed to ensure that the country truly benefits from the act.

According to him, AGOA is yet to impact positively on Nigeria because some of Nigerian produce from the country’s industrial firms are yet to be accepted under the AGOA accord. He said this had brought setback to the economy just as Nigerian manufactured goods find it difficult to into the US market.

“AGOA was signed into law in May 2008, under the U.S. trade and investment Act. It provides access to the US market for more than 6,400 products from Sub-Saharan African countries. “The first phase of the Act lasted from Oct. 2000 to Sept. 2008. The US Congress on August 2015, further extended the period of the Act to 2025,’’ Abubakar said.

He said in order for a country to benefit, it must fulfill basic requirements such as a market based economy that protects property right and adherence to rule of law, including political pluralism. Others, he said, included the elimination of barriers to US trade and investment, and elimination of economic policies aimed at reducing poverty as well as encouraging private enterprise.

He said that the country must also have a system to combat corruption and bribery, protection of internationally recognised worker’s right and non-engagement in gross violation of international terrorism and activities that undermine US national security or foreign policy interest.

Implementation process

Abubakar said that as part of effort to reinvigorate AGOA implementation process in Nigeria, the ministry, after due consultations with the relevant AGOA stakeholders, had identified focal products for Nigeria to maximise its benefits within the shortest time. “The draft document has been forwarded to the minister and awaits approval from the Federal Executive Council (FEC),’’ Abubakar said.

Challenges

He listed the challenges that hinder the realisation of the Act to include lack of sanitary and phyto-sanitary requirements, problem of labeling, packaging and quality.

Others are lack of product specific standard, supply-side constraints such as inability to meet up with large volume of orders from the US and weak competitiveness as a result of weak infrastructure facilities and lack of finance. He said that the country in collaboration with the United Nations Commission for Africa (UNECA) had developed the national AGOA response strategy, adding that it had been validated by stakeholders.

Way forward

He added that the way forward would be to fast-track the Land Use Act to support agricultural activities and strategies to remove administrative and logistic constraint being faced by farmers and exporters. According to him, the ministry has developed a draft strategy with the objectives of promoting Nigerian participation with a view to benefitting from AGOA. The director said Nigeria had no strategy because of some administrative issues. He explained that the former Minister of Industry, Trade and Investment only fine-tuned the document and left without approval.

“We have to start all over with the new Minister, now we have gone back to our drawing board to come up with a strategy that will be acceptable to everyone. “We have scheduled a stakeholders meeting from April 18 to April 19, to fine-tune and validate the document and as soon as possible submit to the minister for approval. “Our target is to get the document approved by July, so we can have something to report at the U.S. annual Congress.

“The strategy is like our roadmap on what we will do between now and 2025, we want to see how we can achieve the lost ground so that Nigeria can start benefiting from the Act. “We also developed an action plan with monitoring and evaluation to ensure that everybody is playing its part,’’ Abubakar said.

Stakeholders’ views on AGOA

Speaking in the same vein, the President, National Association of Nigerian Traders (NANTS), Mr. Ken Ukaoha, affirmed that Nigeria had not benefitted from the Act for some reasons. Ukaoha said that the country was yet to fulfill the requirement in terms of value addition, which was the raw material required.

“This entails that a country must get raw materials for its country to send its goods that will be classified admissible under AGOA,’’ he said. Ukaoha said that the country had not developed the sectors that would give these particular value chains that would be admissible under AGOA, citing the textile industry an example.

“These industries that are dandling would have gingered the capacity of our textile industries and export capacity, unfortunately the production capacity is low and adherence to the requirement are also low,’’ he said.

In his remarks, the Chairman, AGOA Civil Society Organisation Network, Mr. Fred Oladeinde, said that Nigeria’s exports to the United States under AGOA plummeted between 2008 and 2016 due to weak demand for Nigerian crude oil imports. Oladeinde said that there was an urgent need for export diversification to increase Nigeria’s exports to the US, particularly in sectors with strong demand like value added agricultural products, leather, food, spices, and beverages.

According to him, to achieve this goal, Nigeria, an AGOA eligible country, should develop bi-annual country utilisation plan.

Industry stakeholders believe that policy makers have not looked into how the country can tap from the benefits of AGOA amid the collapse of infrastructure.

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