- African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility
Published date:
Tuesday, 07 November 2023
Peter Fabricius

Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa.

That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in particular. 

Coons released the draft Bill on Monday, after the annual Agoa Forum was held in Johannesburg last week.

Much of the discussion focused on whether to renew Agoa when it expires in 2025, for how long and whether to change its terms.

Agoa grants duty-free access to the lucrative US markets for most exports from eligible sub-Saharan countries. 

South Africa has been the biggest beneficiary of Agoa, but recently influential members of Congress, including Coons and Republican Senator Jim Risch, questioned SA’s eligibility because its warm ties with Russia were deemed to threaten US national security and foreign policy interests, violating an Agoa condition.

Last week, the Biden administration released the list of countries it is removing from Agoa next year because of military coups (Gabon and Niger) or human rights violations (Uganda and the Central African Republic). But South Africa remained on the list, despite the congressional misgivings.  

Risch, the top Republican on the Senate Foreign Relations Committee, responded by writing to US Secretary of State Antony Blinken rebuking the administration for allowing SA to host the Agoa Forum and for keeping it on the list of Agoa beneficiaries.

Relations with Hamas and Iran

He said SA should be removed, not only because of its closeness to Russia, but also more recently because of its relations with Hamas and its chief sponsor, Iran. He cited in particular International Relations and Cooperation Minister Naledi Pandor’s call to Hamas leader Ismail Haniyeh shortly after Hamas’ attack on Israel on 7 October as well as her recent visit to Iran to meet her counterpart and President Ebrahim Raisi.  

Pandor’s office told Daily Maverick that Pandor had visited Iran in part to arrange for Raisi’s upcoming visit to South Africa. Risch said in his statement on Thursday that Raisi had been scheduled to visit SA last Tuesday, but that Pretoria had aborted the visit because of the bad impression it might have made on the US on the eve of the Agoa Forum.

Risch said because of the administration’s failure to take action against South Africa, Congress would have to take “course-corrective action”. That now seems to be what Coons is contemplating, perhaps rather unexpectedly as he had been considered a good friend of South Africa.

“Out-of-cycle” reviews are done when special circumstances arise in between the normal annual reviews of all Agoa beneficiaries.

Long-term extension

Coons said that his draft Agoa Renewal Act of 2023” would extend Agoa for 16 years — instead of just 10 years, as in the last extension in 2015.

“This long-term extension would provide businesses with the predictability needed to invest in sub-Saharan Africa at a time when many firms are looking to diversify their supply chains and reduce dependence on China,” Coons said.

“Increased investment by US businesses in sub-Saharan Africa supports regional economic growth and development and strengthens the United States’ position on the continent.”

To help integrate Agoa with the African Continental Free Trade Agreement (AfCFTA) which is slowly coming on stream, Coons’ Bill would modify Agoa’s rules of origin to allow inputs from North African AfCFTA members to count toward the requirement that 35% of a product’s value must originate in the region.

“This change would help Agoa reinforce the AfCFTA’s promise to develop intra-African supply chains,” he said.  However, to participate in the expanded rules of origin, “North African countries would be required to meet Agoa’s eligibility requirements related to governance, human rights and foreign policy.”

Coons’ draft Bill addresses many of the concerns raised at the Agoa Forum. The US deputy assistant secretary of state for Africa, Joy Basu, told Daily Maverick that the Agoa Forum had discussed how to integrate the AfCFTA more and how to include North African countries in Agoa.

She said President Cyril Ramaophsa had told the forum about the importance of strengthening regional supply chains.

“We really want to see those strengthen for multiple reasons,” Basu said. “We really believe that strong regional supply chains and harmonised tariffs, harmonised borders will help American companies. But also it will definitely help South African companies and African companies. And it will raise local prosperity and incomes.”

Basu said the forum had also discussed changing Agoa’s rules of origin to boost the utilisation of the programme, which had not been widely exploited. 

The draft Bill by Coons also addresses what has become known as the Mauritius Clause in Agoa. Under the current Agoa law, nations lose their eligibility for Agoa as soon as they become high-income countries, according to the World Bank’s measure of GNI per capita. That threshold is currently $13,845. 

But Coons noted that developing economies often had volatile economic statistics which could rise above the threshold and then drop back below it. 

This happened to Mauritius recently. 

To remedy the problem, Coons proposes that countries should not lose their Agoa status until they have maintained “high-income” status for five consecutive years.

Coons’ draft Bill also proposes that the current annual eligibility reviews of all 49 sub-Saharan states should only take place every three years, which he said was the standard for other trade preference programmes, such as the Generalized System of Preferences.

Download a copy of the draft Bill (discussion draft) HERE

View an overview of South Africa's performance under AGOA HERE

Read related news articles

South Africa’s AGOA forum: Crafting future pathways for US-Africa trade partnership

Ultimately the African Growth and Opportunity Act (AGOA) could be extended by 16 years, that means until 2041, indicating its importance for strengthening Africa’s trade and economic cooperation with United States. That was, in fact, the main focus during Johannesburg’s early November forum that brought together more than 30 trade ministers, astute investors plus representatives from the regional economic blocs and the African Union. At...

14 November 2023

Africa-US trade: AGOA expires in 2025 - what has it achieved in 23 years?

African governments are seeking an extension of the African Growth and Opportunity Act (Agoa) beyond 2025. The law was enacted in 2000 to “encourage increased trade and investment between the United States and sub-Saharan Africa”. We asked David Luke, who specialises in African trade policy and trade negotiations, what benefits Agoa has brought for qualifying African countries and how it can...

12 November 2023

US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa

President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...

09 November 2023

AGOA extension crucial for Ghana’s industrialisation

The Deputy Minister of Trade and Industry Nana Ama Dokua Asiamah-Adjei is supporting the push for the extension of the African Growth and Opportunity Act (AGOA) to enhance trade between Ghana and the US. A United States Trade Act enacted on 18 May 2000 as Public Law 106 of the 200th Congress, the AGOA legislation has been renewed on different occasions, most recently in 2015, when its period of validity was extended to September 2025. The...

06 November 2023

US-Africa program (AGOA) should be extended through 2041, Senate Democrat says, proposes legislation [Download]

A trade program that grants exports from qualifying African countries duty-free access to the U.S. market should be extended by 16 years, said Democratic Senator Chris Coons, a leading voice on U.S.-Africa policy. Talks are underway for the renewal of the two-decade-old African Growth and Opportunity Act (AGOA), which is due to expire in 2025. African countries want a 10-year renewal of the pact ahead of the 2024 U.S. election. President Joe...

06 November 2023

AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]

Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...

06 November 2023

South Africa pins its hopes on an early 2024 US Congress renewal of AGOA

South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy.   This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...

05 November 2023

AGOA: US vows to support regional integration

The United States says it is committed to supporting regional integration in Africa, seeing it as essential for the continent's economic development and prosperity. At a conference on the African Growth and Opportunity Act (Agoa) in Johannesburg, US officials said they were backing the African Continental Free Trade Area (AfCFTA), even though there will be variations on country specific trading arrangements. Agoa is a trade agreement...

04 November 2023

US committed to ‘seamless’ AGOA renewal, USTR Tai says

The US aims to ensure that its preferential trade pact with Africa is replaced without interruption when it expires in two-year’s time, while bringing it up to date. “We want to make sure that as of Sept. 30, 2025, that there will be another Agoa that will pick up from this one,” said US Trade Representative Katherine Tai, referring to the African Growth and Opportunity Act. “It is a seamless renewal that we’re...

03 November 2023

US president Biden wants to improve US-Africa trade programme, not just renew it - Blinken

President Joe Biden's administration wants to work with Congress to improve the United States' flagship trade programme with Africa, not just renew it without changes, U.S. Secretary of State Antony Blinken said on Friday. First launched in 2000, the African Growth and Opportunity Act (AGOA) grants exports from qualifying African countries duty-free access to the United States - the world's largest consumer market. It is due to...

03 November 2023

You are here: Home/News/Article/US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility