TRALAC - Trade Law Centre

Kenya, Ethiopia ahead of region in benefits of AGOA treaty

Tuesday, 26 May 2020

Kenya led the East African Community members in its use of the Africa Growth Opportunity Act (Agoa) treaty, scoring 98 per cent.

However, it came second to Ghana which recorded 99.1 per cent with Madagascar coming third at 93.7 per cent.

According to data contained in the US Trade and Investment with sub-Saharan Africa: Recent Trends and New Developments report, Ethiopia at 81.9 per cent and the Democratic Republic of Congo (DRC) at 68.2 per cent are the other eastern Africa countries that have also taken advantage of the treaty to increase exports to the US mainly of products like textile and apparels, metals, agricultural products and artefacts.

Increase in apparel exports by Madagascar, Ethiopia and Kenya resulted in US imports of apparel from the region under Agoa increasing by 9.9 per cent annually to $1.2 billion from 2016 to 2018.

“The 10-year extension of the Agoa programme and Agoa’s third-country fabric provision allowed countries to expand apparel production and were the primary causes of the increase in apparel imports,” stated the report.

Kenya’s high rate of Agoa utilisation comes when the country has announced intention to negotiate a US-Kenya free trade agreement that would see Kenya open its borders for duty-free imports from the US, while Nairobi would also get to export a range of goods tax-free to the US.

The two countries share around $1 billion in trade annually.

Notably, only 16 of the 39 Agoa beneficiary countries have prepared national utilisation strategies that identify sectors with the potential to increase exports to the US under the treaty that will expire in 2025.

Kenya, Tanzania and Rwanda are the only EAC countries that have complete utilisation strategies in certain industries like agricultural and food processing, textile and apparels, handicrafts, jewel and mining.

According to the report, US exports to sub-Saharan Africa countries rose from $13.5 billion in 2016 to $15.9 billion in 2018, a compound annual growth rate of 8.5 per cent.

Exports of petroleum products represented the largest portion of the increase followed by exports of aircraft, spacecraft and related equipment, certain motor vehicle parts, motor vehicles, natural gas and components and poultry. 

Despite poultry farmers in Kenya companioning of lack of markets, US poultry exports into the region increased by 28.3 per cent to $465 million from $283 million during the 2016–18 period.

In deed in 2018, the US was the third largest global supplier of poultry to sub-Saharan Africa by value after the European Union and Brazil, with the region accounting for 11 per cent of US exports to the world.

“Rising population and incomes have led to increasing demand for meat protein food sources, which has boosted US exports of poultry to sub-Saharan Africa,” noted the report.

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