What does the US decision to delist three African countries from AGOA status imply?

What does the US decision to delist three African countries from AGOA status imply?
Published date:
Tuesday, 11 January 2022
Author:
Oluwatosin Ogunjuyigbe

Trade is one highly significant part of Africa’s story. Its pre-colonial, colonial and post-colonial transitions are all marked by trade. But for many years, African trade has struggled with several challenges: poor infrastructure, high transaction costs, opportunism and unfriendly policies.

So when President Bill Clinton signed the African Growth and Opportunity Act (AGOA) in 2000, African countries were given a competitive edge by providing unilateral duty-free exports for 6,500 products from Africa to the United States.

But that reality is changing for some countries. On January 1st, 2022, the US officially barred Ethiopia, Guinea and Mali from accessing the AGOA.

The move comes two months after president Joe Biden told Congress that he plans to cut off the three countries from the program over coups and alleged human rights violations, which put them in violation of the program’s eligibility requirements.

A lot of groups and individuals have condemned the US government’s decision. Ethiopia’s Investment Commission described the sanction as disappointing and very regrettable. Meanwhile, other groups such as the American-Ethiopian Public Affairs Committee (AEPAC) have tried to lobby the White House to reconsider, but all to no avail.

Why these countries were barred

This is not the first time the US is delisting countries. As of 2020, 38 countries were eligible for AGOA benefits. The requirement for eligibility is that the countries involved must establish conducive environments for democracy and human rights. Mali is getting the stick for the second time.

The first time was when President Obama removed it in 2013 over a coup. Ethiopia has been in the midst of a civil war since November 2020, which has already left thousands of people dead and displaced more than 2 million. In Guinea, military officer Mamady Doumbouya has been running the country as an interim minister since October, after he led the country’s armed forces in a coup the previous month.

And in Mali, Assimi Goïta, a military officer, has been serving as interim president since May 2021, when he led the army to a coup.

Why does it matter?

In 2019, African countries exported goods worth $8.4 billion to the US under AGOA. The agreement has helped participating countries develop products for US consumers, grow industries, and create jobs. For example, it helped to create a huge textile industry in Ethiopia.

From 2000 to 2020, the country exported garments worth $722 million to the US duty-free, including to major American fashion labels such as Calvin Klein and Tommy Hilfiger. By taking advantage of the AGOA, Ethiopia’s poverty dropped by 42 per cent in the same period. Mali has also benefited from exporting arts and antiques to the US, and Guinea has benefitted from aluminium exports.

The removal of the three countries from the AGOA program and the tensions in the countries threaten economy-driving industries which employ thousands and will likely rattle investors. Already, the global clothing company PVH Corp, which includes brands such as Tommy Hilfiger and True & Co., has said it is closing its manufacturing facility in Ethiopia due to the crisis in the country.

PHV Corp, which entered Ethiopia together with other American companies because of the Ethiopian government’s drive to build industrial parks to make apparel and footwear for export, announced its decision two weeks after Biden’s statement in November.

The AGOA decision will cause these countries to start cultivating markets elsewhere. China has already announced new investments in Ethiopia since the US announced the country’s delisting from AGOA. So it’s very likely that Africa’s largest creditor establishes a new market.

View related news articles

US takes Ethiopia, Mali, Guinea off AGOA program

The United States on Saturday cut Ethiopia, Mali and Guinea from access to a duty-free trade program, following through on President Joe Biden's threat to do so over accusations of human rights violations and recent coups. "The United States today terminated Ethiopia, Mali and Guinea from the AGOA trade preference program due to actions taken by each of their governments in violation of the AGOA Statute," the U.S. Trade Representative's...

01 January 2022

Despite a late push, Ethiopia is set to exit the US trade pact

Despite a last-minute drive backed by diaspora members who fear that Washington may lose an ally, Ethiopia is likely to lose important commercial privileges in the United States on January 1 due to human rights concerns. President Joe Biden said on November 2 that Ethiopia, a longtime US ally and the continent’s second most populous country, will be removed from the African Growth and Opportunity Act in the New Year, citing “grave...

30 December 2021

US President terminates AGOA preferences for Ethiopia, Mali and Guinea

U.S. President Joe Biden announced yesterday that he has “determined that Ethiopia, Guinea, and Mali do not meet” the AGOA requirements described in section 506A(a)(1) and has proceeded to “terminate the designation of the three countries as beneficiary sub-Saharan African countries …effective January 1, 2022.” On November 21, the Ethiopian Ministry of Foreign Affairs lamented the impending decision by the U.S. to remove Ethiopia...

24 December 2021

Senator Van Hollen, Representative Bass urge Biden Administration to reconsider Ethiopia's suspension from AGOA

Today, U.S. Senator Chris Van Hollen (D-Md.) and Congresswoman Karen Bass (D-Calif.) urged President Biden to reconsider his Administration’s November 2, 2021 decision to terminate Ethiopia’s designation as a beneficiary country under the African Growth and Opportunity Act (AGOA) at the end of this year. As the lawmakers note in their letter (download a copy at the link alongside), this decision will hurt the nation’s most vulnerable...

23 December 2021

US terminates duty-free trade access to Ethiopia over conflict

Ethiopia’s duty-free export access to the U.S. has been revoked by President Joe Biden due to its failure to meet the requirements, according to the White House. The action comes after 13 months of civil war in the country. Ethiopia is disqualified from participation in the Africa Growth and Opportunity Act due to gross violations of human rights, the U.S. Trade Representative said when it notified Ethiopia in November....

23 December 2021

'Ethiopia approaches civil war - but Team Biden should avoid harming AGOA'

As day turns to night in Ethiopia, International crisis negotiators are feverishly working to avoid an all-out civil war. America’s top diplomat, Secretary of State Antony J. Blinken is in nearby Kenya trying to help resolve the crisis.  America utilized several pressure tactics to try to bring this outbreak to a resolution but none have worked so far. The latest is to give Ethiopia a 60-day notice of withdrawal from the African Growth...

17 November 2021

Why US is suspending Ethiopia, Mali, Guinea trom AGOA 'trade deal'

In response to human rights violations, the United States announced this week that it plans to suspend Ethiopia, Mali and Guinea from duty-free access to American markets as of January 1, 2022.U.S. President Joe Biden said in a statement to Congress, released Tuesday (see alongside), that these nations were no longer in compliance with the eligibility requirements for the African Growth and Opportunity Act (AGOA). He cited various...

09 November 2021

Statement from Ambassador Tai on the AGOA eligibility review

WASHINGTON – Ambassador Katherine Tai today released the following statement on the African Growth and Opportunity Act (AGOA):  “Today, President Biden announced three countries will be terminated from the AGOA trade preference program as of January 1, 2022, absent urgent action to meet statutory eligibility criteria. Our Administration is deeply concerned by the unconstitutional change in governments in both Guinea and Mali, and by...

02 November 2021

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...

02 November 2021

Ethiopia pushes to keep AGOA access amid US rights concerns

Ethiopia urged the U.S. to let it retain market access under the African Growth and Opportunity Act (AGOA) because disqualification will deprive many people of their livelihoods in the conflict-wracked country. A withdrawal of the preferential access would put as many as 85,000 direct jobs at risk and about 1 million across the entire value chain, Ethiopia’s Chief Trade Negotiator Mamo Meheretu said in an interview from the capital, Addis...

08 October 2021