TRALAC - Trade Law Centre

US-African trade lagging despite free access

Thursday, 08 August 2019

Source: AFP

Trade between the US and sub-Saharan Africa is in the doldrums despite a 2000 US law designed to boost access to the US market, a conference in Ivory Coast has been told.

The African Growth and Opportunity Act (Agoa), which in 2015 was extended to 2025, provides tariff-free access on 6,500 products to 39 countries, ranging from oil and agricultural goods to textiles, farm and handicrafts.

Trade quadrupled in value from 2002 to 2008, a year when it reached $100bn , but fell back in 2017 to $39bn, according to figures compiled by the US Agency for International Development (USAID).

The surplus is widely in Africa's favour, but most exports to the US are in oil or petroleum-based products, not the industrialised goods that provide a value-added boost to local economies.

"I do not think that Agoa has been the game-changer for many countries on the continent that we hoped it would be," Constance Hamilton, assistant US trade representative for Africa, told the 18th Agoa Forum, ending in the Ivory Coast's economic capital Abidjan on Tuesday.

"Agoa has not led to the trade diversification for which we originally hoped," she said in remarks on Monday.

"Petroleum products continued to account for the largest portion of Agoa imports, with a 67% share," Hamilton said. "And the volume of Agoa trade remains modest. In the Agoa clothing sector, for example, we get about $1bn per year from Africa," he said. This amounted to only 1% of all US clothing imports.

The US is Africa's third-biggest trade partner after the EU and China. But Africa attracts only about 1% of all US foreign investment.

Deputy US trade representative Curtis Mahoney said Washington had drawn up a variety of new initiatives to "lay the groundwork for an even closer trade and investment partnership".

"We will combine the promise of the AfCFTA [African Continental Free Trade Area] with these new US initiatives and help maximise the potential of US-Africa trade," he said.

The AfCFTA is a scheme for demolishing trade barriers among the 55-member African Union (AU).

The long-negotiated agreement was ceremonially launched at a summit in July but will need a year to become operational, the AU says.

According to the conclusions of a meeting of ministers ahead of the Abidjan conference, only 18 out of 39 countries have set down a national strategy for exploiting the benefits of Agoa.

Many African companies either do not know of the advantages that are on offer, or they do not know how to use them, the ministers found.

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