Africa pushes for three-year AGOA reviews
African trade ministers, including South Africa’s, are pushing for the annual eligibility reviews of the African Growth and Opportunity Act (Agoa) to be conducted every three years instead of annually to allow for predictability and certainty for investors.
This is after four beneficiary countries, Uganda, Niger, the Central African Republic and Gabon, were kicked out of the trade programme on the eve of the forum’s annual summit in Johannesburg partially because of human rights issues.
Agoa requires that US legislators conduct annual eligibility reviews of beneficiaries. Eligibility criteria include beneficiaries not engaging in gross violations of internationally recognised human rights or providing support for acts of international terrorism and not engaging in activities that undermine US national security or foreign policy interests.
In a discussion document, which Business Day has seen, the trade ministers say the US Congress should “reconsider the annual reviews that contribute to uncertainty and hamper investment decisions ... [and] would also be in alignment with other US preference schemes”.
Agoa, which was first enacted in 2000, provides 35 sub-Saharan countries preferential access to US markets.
Largest partner
For SA, Agoa provides preferential access for about 20% of its exports to the US, or 2% of its shipments exports globally. Major sectoral beneficiaries in 2021 included vehicles, iron and steel, edible fruit, organic chemicals, and precious stones.
SA is the US’s largest trading partner on the continent with the two-way trade in goods of $21bn in 2021.
On Thursday, trade, industry & competition minister Ebrahim Patel alongside AU trade commissioner Albert Muchanga chaired a meeting of African trade ministers ahead of the first day of a summit to iron out the proposals they would put to US trade representative Katherine Tai during the forum.
Reconsider
The ministers will push for the US to reconsider the exclusion of the four countries because it “disrupts the emerging regional value chains and thus reduces the contribution of Agoa to the structural transformation of the continent”, the discussion document reads.
Other recommendations include that the US avoid extraordinary levies and taxes on various Agoa-eligible goods such as steel and agricultural products, as well as the removal of textile visas.
Agoa beneficiaries also want the trade pact, which is due to expire in 2025, to be extended by another 10 years with “non-controversial amendments”.
African trade ministers will also push for the extension to include AU member states that have signed and ratified the African Continental Free Trade Area (AfCFTA).
Should this be approved, Agoa could be extended to northern African states.
Business Day previously reported that Louisiana senator John Kennedy had introduced a bill in the US Congress to extend Agoa by 20 years because it would help deter “China’s growing influence throughout the region. This extension would allow the US to keep working closely with African nations to grow our economies, reduce poverty and ensure that US values prevail in the region”.
Though Agoa beneficiaries are looking to extend the trade pact by only 10 years, they have endorsed the proposed amendment by Kennedy, saying that should it be approved it would “create a new positive dynamic in the US Congress”.
In his address at the trade ministers’ meeting, Muchanga said the main focus of the forum would be that Agoa be extended for only a decade. However, a 20-year extension would be accepted as this would give investors time to generate profits. “Anything lower than that would generate uncertainty.”
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