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Ethiopia asks US to reinstate AGOA trade benefits as US Secretary of State Blinken heads to Addis, Niger

Published date:
Thursday, 09 March 2023
Author:
Julian Pecquet

Ethiopia is asking the Joe Biden administration to reinstate its duty-free access to the US market, arguing that “exceptional circumstances” warrant an immediate re-examination of its suspension just as Secretary of State Antony Blinken heads to Addis Ababa to discuss the cessation of hostilities in Tigray.

The Office of the US Trade Representative (USTR) terminated Ethiopia’s participation in the African Growth and Opportunity Act (AGOA) program effective 1 January 2022, accusing Prime Minister Abiy Ahmed’s government of “gross violations” of human rights.

In a 3 March letter to USTR chief Katherine Tai, Ethiopia’s US lobby firm argues that the country has addressed US concerns through its November peace deal with the Tigray People’s Liberation Front (TPLF) and deserves to be let back in.

US law firm Squire Patton Boggs is seeking a so-called “out-of-cycle review” for Ethiopia barely three months after USTR completed its annual review for all African countries. The petition lists several recent developments, including:

  • The 2 November peace deal with the TPLF;
  • The launch of the African Union’s Monitoring, Verification and Compliance Mission on 29 December;
  • The resumption of “unfettered” humanitarian aid to Northern Ethiopia;
  • The restoration of services, including telecommunications, electricity and banking; and
  • The development of a transitional justice framework,

“These historic and exceptional circumstances sufficiently justify USTR’s initiation of an out-of-cycle review for Ethiopia,” the firm told Tai, according to a lobbying disclosure with the US Department of Justice.

“Initiating an out-of-cycle review of Ethiopia’s status as a beneficiary country under AGOA is a key step in supporting Ethiopia, its citizens, and especially the women and children disproportionately impacted by Ethiopia’s termination from the program.”

The petition comes as the State Department announced today that Blinken would be headed to Ethiopia and Niger from 14 March to 17 March.

In Ethiopia, the top US diplomat is expected to discuss “implementation of the cessation of hostilities agreement to advance peace and promote transitional justice in northern Ethiopia” and meet with humanitarian partners and civil society actors “to discuss humanitarian assistance delivery, food security, and human rights,” according to a State Department press statement.

He will also meet with African Union Commission Chairman Moussa Faki Mahamat to discuss “shared global and regional priorities and follow up on commitments from the US-Africa Leaders Summit regarding food security, climate and a just energy transition, the African diaspora, and global health” while underscoring “US support for African permanent representation in multilateral bodies.”

On 16 March, Blinken will proceed to make first-ever visit to Niger by a US Secretary of State, meeting with President Mohamed Bazoum and Foreign Minister Hassoumi Massaoudou in Niamey.

There he will discuss “ways to advance the US-Niger partnership on diplomacy, democracy, development, and defense” while engaging “youths from Niger’s conflict zones, who have completed the Disarmament, Demobilization, Reintegration, and Reconciliation (DDRR) program, to learn about their contributions to peace in Niger.”

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Tough loss

AGOA was signed into law by President Bill Clinton in 2000.  The program grants duty-free access to the US market for 1,800 products, in addition to the more than 5,000 products eligible under the Generalised System of Preferences (GSP) program.

In 2021, African duty-free exports to the US under the program amounted to $6.7bn, out of a total of about $64.3bn in two-way trade in goods.

Ethiopia has long been one of the biggest beneficiaries of the program, which supports an estimated 56,000 jobs in the country, mostly in the apparel sector. Ethiopia was the fifth largest beneficiary of the AGOA program in 2020, with $237m worth of exports to the US.

The Office of the US Trade Representative (USTR) singled out Ethiopia’s success under the program in its biennial report to Congress that year.

“As one example of what an individual country can do to leverage its AGOA benefits over a five-year time horizon,” then-US trade representative Robert Lighthizer said. “Ethiopia’s annual apparel exports under AGOA increased dramatically from $20.3m in 2015 to $209.6m in 2019.”

In its petition, Squire Patton Boggs notes that the AGOA suspension has hit women worst of all.

“Prior to Ethiopia’s disqualification from AGOA, the nation made immense strides to transform its economy into a leading textile industry that predominantly employs women,” the petition says. “With 80% to 90% of the Ethiopian textile manufacturing jobs belonging to women, the nation’s textile industry has provided many women their first-ever paying job, empowering them and feeding their families.”

“Continued suspension from the AGOA program,” the petition says, “gravely threatens Ethiopia’s burgeoning manufacturing sector that has contributed to Ethiopia’s efforts to achieve greater equity”.

The petition also suggests that the State Department may support reinstatement, pointing to a $2m funding opportunity for “Advancing Survivor Centred Transitional Justice in Ethiopia” announced on 13 February.

“This endorsement from the State Department underscores the substantive change in Ethiopia’s circumstances, from hostilities to peace, towards reconciliation,” the petition says.

The State Department declined to say whether it supports the out-of-cycle review.

“Ethiopia has clear benchmarks for a pathway toward reinstatement, and the administration will continue to work with the Government of Ethiopia to achieve that objective,” a State Department spokesperson tells The Africa Report.

USTR did not respond to a request for comment.

 

Mixed reception

Ethiopia’s request is getting a mixed reception from lawmakers on Capitol Hill. Their opinion matters greatly as Congress wrote the original law creating the AGOA program and will decide whether to renew it when it expires in 2025.

Maryland Democrat Chris Van Hollen, a member of the Senate Foreign Relations Committee, joined the then-chairwoman of the House Foreign Affairs panel on Africa (and now mayor of Los Angeles) Karen Bass back in December 2021 to protest Ethiopia’s original suspension. This week, he told The Africa Report it is “important to recognise” that Prime Minister Abiy Ahmed’s government has made “enormous progress toward peace”.

“I hope USTR will give this full consideration because I do think that the peace process has advanced,” says Van Hollen, whose state contains a sizable population of Ethiopian descent in the Washington suburbs. ”It’s fragile, but holding, and the current penalties are really hurting, not the government or the TPLF, but […] everyday farmers and entrepreneurs in Ethiopia. So whoever people want to punish, we’re not punishing the ones they want.”

Congressman Don Beyer, a Democrat representing Virginia’s Washington suburbs who sits on the trade policy-setting Ways and Means Committee, endorsed an out-of-cycle review as far back as November 2022, soon after the 2 November peace agreement.

“For the last two decades, AGOA has served as one the most important tools in strengthening US – Ethiopian ties,” Beyer said in an 18 November letter to Tai. “It has also accelerated Ethiopia’s economic growth and improved living standards. Our hope is that the recent truce brokered by the African Union, which allows unhindered humanitarian supplies to Tigray, will lead to Ethiopia’s swift re-entry into AGOA.”

Likewise, Congressman John Garamendi, a California Democrat who co-chairs the Ethiopian American Caucus, also appears supportive judging from correspondence from Squire Patton Boggs.

“We appreciate Congressman Garamendi’s ongoing leadership and support to restore the [US-Ethiopia] relationship and look forward to further collaboration to build additional support,” the firm said in an email to Garamendi’s chief of staff informing him of the petition.

Powerful voices however stand opposed.

“I’m not ready to come to that conclusion,” the chairman of the Senate Foreign Relations Committee, New Jersey Democrat Robert Menendez, tells The Africa Report when asked if it was time to let Ethiopia back into AGOA. “What is happening in the Tigray region is really still a challenge. Expelling foreign forces from Ethiopia is still something we want to see happen … They’ve got to do more than [what they’ve done so far].”

 

China factor

US competition with China on the continent is another factor both the administration and Congress look at when weighing options.

As of 1 March, Beijing has granted zero-tariff treatment to 98% of taxable items originating from Ethiopia, Burundi and Niger, Chinese agency Xinhua reports.

“The new step is conducive to materialising the spirit of China-Africa friendship and cooperation, helping the least developed countries accelerate their development, and building an open global economy,” Xinhua says, quoting the Customs Tariff Commission of the State Council. “China will move further to gradually expand such treatment to all the least developed countries that have established diplomatic ties with China.”

Asked about the Chinese deal, Van Hollen says: “I think the United States needs to be much more forward-leaning when it comes to our economic engagement with countries throughout Africa.”

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