TRALAC - Trade Law Centre

AGOA Stimulates Economic Liberalization

Friday, 14 February 2003

Source: The Independent (Banjul)

The US Africa Growth and Opportunity Act (AGOA), symbolizes aid and opportunities aimed at stimulating economic growth in Africa and to integrate her economies into the global economy for increase productivity. It also serves as a catalyst for economic development by underpinning free exportation of goods, and promoting world marketing of goods, and services from Africa. Critics have associated it with another form of exploitation and colonization of African countries.

Nonetheless, the primary objective of AGOA is "to encourage increased trade and investment between the world's largest economy, United States and the sub-Saharan Africa through reduction of tariff and non-tariff barriers to trade, expansion of US assistance for regional integration, negotiation of mutually beneficial and reciprocal trade agreements, promotion of private sector engagement, and democratization".

It is important to note that countries that have already benefited from AGOA "capture the essence of globalization for the region by expanding markets, stimulating trade and investment flows, and unleashing the vast potential of international cooperation to ensure a better life for millions of the world's poor".

"The scheme has helped transform the economic situation of a number of sub-Saharan African countries by stimulating new trade and investment opportunities for African and American businesses worth hundreds of millions of dollars, and enabled US imports from Sub-Saharan African countries increase by more than 50 percent from 1999 to 2001" according to U.S 2002 administration report on AGOA.

Last year alone, sub-Saharan Africa under AGOA sold $8.2 billion more in goods to America than in previous years, representing 61.5 percent increase, whilst U.S exports to Sub-Saharan Africa had increased by 17.5 percent.

Generally, AGOA encourages and increases trade through reduction of tariffs, expansion of trade promotion, private sector growth, and creating new avenues for trade and opportunities, which would liberalize the economy for poverty reduction, and political stability.

The scheme was legislated five years ago, and signed on 18th March 2000 to give preferential treatment to countries that can take advantage of trade benefits for improving revenues. Substantially, it opens U.S markets to African countries, establishes high-level policy dialogue, and provides incentives for African countries to achieve political and economic reforms and growth.

The benchmark for admission into AGOA depends on countries "best practices", progress towards a market based economy, rule of law, elimination of trade and investment barriers, and a system to combat corruption, among other specifications.

The Gambia's admission into AGOA, on 1st January 2003, would allow preferential, duty-free, and quota- free access for Gambians exports into U.S markets, and foster Gambia-U.S relations. The programme was launched by the government of The Gambia at the Coconut Residence with its information center located in GCCI's Banjul, office.