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AGOA Forum 2007: Taking stock

Published date:
Sunday, 22 July 2007

As trade grows, Africa prospers. This was the theme of the recently concluded annual AGOA Forum, held this year in Accra, the capital city of Ghana. It attracted representatives from all 38 AGOA beneficiary countries, including many trade and industry ministers, as well as a 140-strong US government delegation, representatives of the private sector and civil society, and forms the key annual event in United States / Sub-Saharan Africa trade relations and economic co-operation.

Now in its 6th edition, the annual AGOA Forum is provided for in the AGOA legislation and is held alternatively in Washington D.C. and an African State. Previous African hosts were Senegal and Mauritius in 2005 and 2003 respectively.

The Forum differed fundamentally from previous editions in that it was more integrated – meaning it steered away somewhat from the concept of separate private sector, civil society and government sessions. Government-to-government dialogue nevertheless took place on the sidelines, with the Forum being preceded by the ‘Second Meeting of the African Consultative Group on AGOA’ (see separate article ).

Amid the fanfare, which included opening remarks by Ghanaian President John Kufuor, United States Trade Representative Susan Schwab, Ghanaian Minister of Trade and Industry Alan Kyerematen, as well as a video broadcast by US President George Bush, the AGOA Forum began in earnest with plenary sessions followed by various parallel sessions.

President Kufuor, while acknowledging the important impact that AGOA has had in raising exports, contributing to export-experience, and facilitating greater economic and social (in the broadest sense) engagement between the United States and Africa, called on AGOA to be extended by Congress by a further 20 years. This would work towards providing a more predictable framework for trade – despite the fact that AGOA can be amended at any time by US lawmakers. He also called on African exporters to diversify their export offerings, and to engage in more beneficiating activities within Africa rather than simply being producers of raw materials. There was also a need for more targeted initiatives and assistance to build African capacity to trade with the United States – including trade facilitation, dealing with SPS measures, and bringing together exporters with buyers from the US.

Minister Kyerematen raised some important issues in his opening remarks, including the need for capacity building to meet technical barriers to trade faced by African exports, enhanced awareness about how to benefit from AGOA, and the need for the United States to do more to drive the Aid-for-Trade (A4T) debate.

But a point that stood out from his remarks, and is perhaps of major relevance in the context of AGOA, was the fact that duty-free-quota-free (DFQF) poses a major threat to Sub-Saharan Africa. DFQF is currently debated both within the WTO’s Doha Round as well as unilaterally and in parallel within the United States, and involves the phasing out of all tariff measures on the exports of least developed countries. While LDCs at the Hong Kong Ministerial, and heads of government a few weeks ago at the African Union meeting in Accra called for DFQF, the implications for Africa are often not properly understood. More worryingly, it is often not realised that some of Africa’s largest competitors for export market share (Bangladesh etc.) are also classified as least-developed, as are the majority of Africa’s AGOA beneficiaries. DFQF would have the impact of eroding some of AGOA countries’ margins of preference vis-à-vis its competitors, leading to likely losses in exports especially in key sectors such as textiles and clothing.

During the first plenary representatives from the four regions (East and West Africa, Southern and East Africa) reported back on progress made under AGOA, challenges faced and opportunities ahead. For example, Central African countries saw most of their ongoing potential to be in handicrafts, wood and fish processing, but acknowledged that AGOA has had a limited real impact on the region. This, it was stated, was not so much because of any holes in the AGOA legislation or insufficient product coverage, but related to a large extent to insufficient supply capacity within the region. (See link to Central African countries’ aggregate bilateral trade profile under AGOA).

East Africa (see link has been a major beneficiary under AGOA, with strong exports in the energy-related fields, clothing and agricultural products. However, representatives cautioned against an over-reliance on garment exports, which may be threatened in the log term by declining terms of trade and reduced margins of preference. Developing local capacity for ongoing product developments, in sync with what the US market demanded, remains one of the region’s greatest challenges under AGOA.

West Africa is the major source of energy=related exports under AGOA, something that often hides the fact that the region has an abundance of other resources too. So far, only some agricultural products have gained from AGOA, as well as limited clothing exports. Key constraints listed for the poor performance by the region in diversifying its export base were counted as including non-tariff barriers into the US (specifically SPS, fumigation requirements, packaging, labelling), supply constraints (such as the high cost of freight), the difficulty associated with obtaining business visas for travel to the US, as well as a general lack of available finance for business ventures. On the latter, it was stated that the US Export-Import Bank (EXIM) did not cater adequately to the needs of African businesses.

Southern Africa , and especially South Africa , has the most diversified exports to the US under AGOA. This includes agricultural products, energy-related, chemical and related, clothing, minerals and metals and transportation equipment. For example, new-model BMW 3 series vehicles for the American market are today produced in South Africa, and exported duty-free under AGOA. Nevertheless, the potential of AGOA is undermined by various key challenges, including a too narrow product scope, strict rules of origin especially for the textile and clothing sectors, and inadequate physical infrastructure in African countries. Further uncertainty is created by unpredictable technical barriers (SPS measures etc.) and un-transparency in the application of eligibility criteria.

A common thread that nevertheless emerged in the regional perspectives was the fact that AGOA has given hope to producers across Africa, not only in exporting to the US market but in proving to the world that African producers can offer internationally competitive value-added products. AGOA, while sometimes somewhat optimistically seen as a panacea to many of Africa’s trade woes, has also forced local producers, policy makers and NGO stakeholders to engage with each other with far greater intent, to clean up poor trade infrastructure and customs administration systems, and to look at trade as a vehicle with which to reduce poverty, rather than financial aid.

The 6th AGOA Forum was held at the Accra Convention Centre. Alongside the spacious venue a trade fair showcased regional products, ranging from handicrafts to garments and agricultural products (for example Shea butter, a regional speciality with major export potential).

Inside the Accra Convention Centre. This year’s AGOA Forum hosted by Ghana differed from previous editions in that the main event was an integrated one, with private sector and NGO representatives sharing the stage (and audience) with African and US government delegations.

At the opening plenary, dignitaries included Ghanaian President John Kufuor (center), to his left the Ghanaian Minister of Trade and Industry Hon. Alan Kyerematen, current United States Trade Representative Susan Schwab (4th from left), U.S. trade representative for Africa, Flori Liser (3rd from left) as well as representatives of US and African NGOs and the private sector.

US president George Bush delivering a video message to the delegates, promising to step up efforts to deepen AGOA beneficiaries trade relationship with the US, and committing further funds for capacity building, technical as well as health and related initiatives.

South Africa’s Minister of Trade, Hon. Mandisi Mpahlwa, arrives at the AGOA Forum.

Outside the Accra Convention Centre, where the AGOA Forum was held, a trade fair showcased some of the region’s export-ready products.

Inside the trade fair, a visitor samples some of the rich wax textiles produced in AGOA beneficiary countries.

At the trade fair, the West Africa Trade Hub – a USAID funded initiative - had prepared a stand to showcase some of the region’s potential export products. Here Leah Quin (Communications and Outreach Coordinator at the Hub) shows Barry Fisher (Executive Director – ACTIF) one of the products showcased by the hub on behalf of the country’s exporters.

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