US to suspend Ethiopia, Guinea and Mali from AGOA in 60 days
Ethiopia is to be suspended from the United States’ tariff-free African Growth and Opportunity Act (AGOA) in a sign of the continuing deterioration in relations between the countries amid Ethiopia’s ongoing war in Tigray.
Ethiopia is one of three African countries – alongside coup-hit Guinea and Mali – which will lose access to the scheme, which provides tariff-free access to the US market for African manufacturers, from January 1st.
AGOA brings Ethiopia about $100m in “hard cash” annually and directly generates employment for about 100,000 people, mostly women in southern Ethiopia working in textile factories that export to the US, according to Vanda Felbab-Brown, co-director of the African Security Initiative at Brookings.
In recent months the US has harshly criticised the conduct of Ethiopia’s war in the Tigray region, which began in November 2020 and is estimated to have claimed tens of thousands of lives. Human rights organisations have reported massacres and mass starvation as the government’s war against the Tigray People’s Liberation Front (TPLF) has escalated.
In a statement to Congress, US President Joe Biden said that Ethiopia’s “gross violations of internationally recognized human rights” would lead to its disqualification from the scheme.
The suspension follows a September 17th executive order sanctioning Ethiopians involved in violence in the Tigray region. Biden said that the situation in northern Ethiopia, characterised by “widespread violence, atrocities, and serious human rights abuses” constituted “an unusual and extraordinary threat to the national security and foreign policy of the United States.”
Nevertheless, Charlie Robertson, global chief economist at Renaissance Capital, said that the suspension of Ethiopia from AGOA “isn’t likely to have a serious impact.”
“This sounds worse than it is. AGOA gives preferential trade access to African exporters – but Ethiopia doesn’t export much, let alone to the US. In 2020, Ethiopia only sold $3bn of exports based on IMF figures we’ve collected, and in 2018/19 just 7% of Ethiopia’s exports went to the US (according to National Bank of Ethiopia annual report for 2018/19)…So by my reckoning, this might impact less than $200m of Ethiopia’s exports, and even then this only removes the preferential trade access. Ethiopia presumably can still sell to the US.”
[AGOA.info note: see Ethiopia-US trade data here. Almost half of Ethiopia's $524m in exports to the US in 2020 utilized AGOA preferences - mainly for apparel and footwear, two sectors reliant on AGOA preferences. Since Ethiopia is not a WTO Member State, the country's standard tariff schedule for access to the US market has far higher tariffs than would be the case under normal tariff relations tariffs (NTR). A loss of AGOA removes preferential access to 6,500 tariff lines. The U.S. GSP is also currently expired. ]
Suspension for juntas
Meanwhile, Guinea and Mali are to be suspended from AGOA after military coups upended their constitutional orders. United States Trade Representative Ambassador Katherine Tai said the US remains “deeply concerned by the unconstitutional change in governments”.
In September, Guinean President Alpha Condé was deposed by the self-styled National Committee for Reorientation and Development, a military junta which dissolved the government and constitution and removed senior public officials from office. Guinea is to be suspended “for not having established, or not making continual progress toward establishing the protection of the rule of law and of political pluralism.”
Mali, which experienced its second military coup in a year in May, was cited “for not having established, or not making continual progress toward establishing, the protection of the rule of law, political pluralism, and internationally recognized worker rights, and for not addressing gross violations of internationally recognized human rights.“