- African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/Deputy AU chairperson says AGOA requires some changes to fully benefit Africa

Deputy AU chairperson says AGOA requires some changes to fully benefit Africa

Published date:
Thursday, 17 July 2008

The Deputy Chairperson of the African Union (AU) Commission has said all Sub-Saharan African countries should be eligible to export to the United States under the Africa Growth and Opportunity Act (AGOA).

First enacted into law in 2000, AGOA is the U.S. trade and investment policy that provides trade preferences to designated African countries that are making progress in the areas of economic, political and human rights.

Deputy AU Chairperson Erastus Mwencha also said Africa would like for AGOA to be made more permanent and the criteria for eligibility more transparent and predictable.

The Seventh annual AGOA review meeting concluded Wednesday in Washington.

Secretary of State Condoleezza Rice, who addressed the forum for the last time, said because of AGOA Africa’s wealth grew 7 percent in the past year and that non-energy trade between the United States and AGOA countries has doubled since 2001.

Mwencha told VOA in Washington that Africa sees a mixed review for AGOA.

“As you know AGOA has been running now for eight years, and when it started, the focus was very much hoping that it could be able to attract exports and imports into the United States and into Africa. And the review that has taken place has shown that yes, trade has grown, but when you look at the exports from Africa, it’s more of textiles and garments, otherwise the bulk of it which over 90 percent is all petroleum exports from Africa,” he said.

On the other hand, Deputy Chairperson Mwencha said the exports from the United States to Africa are more balanced comprising a variety of products.

“One of the review issues was that Africa could do better in terms of diversification. The meeting then agreed that we now need to start to see what’s missing to make it a truly trade and development tool,” Mwencha said.

About 70 percent of Africa depends on agricultural. But Mwencha said even though Africa has a comparative advantage in agriculture, several factors make it difficult for Africa to export agricultural products to the United States.

“There are two, three reasons we are not exporting to the United States. One, agricultural products tend to be bulky and so far it’s so difficult to organize transport to bring products to the United States. Secondly, there are market barriers in the United States. As you know there are sanitary regulations, and to get a visa for export of agricultural products to the United States takes a long time and that has discouraged Africans from pursuing that line of exports for agricultural products,” Mwencha said.

The AU Deputy Chairperson said another factor making it difficult for African countries to export products to the United States and other developed countries is their subsidy of agricultural products.

But Mwencha said the just concluded AGOA forum in Washington took steps to address some of Africa’s concerns.

“This meeting has taken a step towards agreeing that first of all AGOA should try to identify those challenges that make it difficult for Africa to diversify its exports. These challenges include access to technology, access to finance, and more so investment. For instance if you look at the aspect of investment, there is very little U.S. investment except in the oil sector,” he said.

Forty-one Sub-Saharan countries are currently eligible to benefit from AGOA. Deputy Chairperson Mwencha said the AU would like to see all Sub-Saharan African countries eligible for AGOA.

“We would like to see all Sub-Saharan African countries be eligible to export here. And that’s not all. Africa is also asking that AGOA should be more permanent, and if it is permanent, then it’s predictable, and it should also be transparent,” he said.

Congress extended the first phase of AGOA to the year 2015. Mwencha said AGOA should be made permanent because no investor is going to invest long-term in Africa for a project that is going to end in a few years.

“Permanency means enact as law to indicate that Africa would have this preferential market access to the United States on a permanent basis,” he said.

Mwencha also said the United States should make easier for more African countries to be eligible for AGOA.

“Make it also transparent because the criteria for eligibility could be made easier, particularly when you are looking at business because some of the elements that are used for a country to be eligible are non-commercial and sometimes frustrate the business community. Imagine a business person sets up a factory to export to the United States, for some reasons and for actions not related to business, somebody else’s action leads them to losing that market. That doesn’t go well for an investor to go to Africa aiming to export to the United States,” he said.

Mwencha said African countries are taking steps under the New Partnership for Africa’s Development (NEPAD) to improve intra-Africa trade and reduce the cost of doing business on the continent.

“The transaction cost of doing business in Africa is very high. So Africa needs to address those issues that make it difficult for goods to move within the continent, so that we can have more intra-African trade,” he said.

On what some see as the increasing inroads China is making in Africa, AU Deputy Chairperson Mwencha said it is a misconception to say that China is making inroads in Africa.

“China has been and always a friend of Africa for quite some time. If you look at the struggle for independence, China was there to support many of the African countries to fight against colonialism and apartheid. China has also been in Africa doing social programs and even investment in textiles, and in railroad. So China is not making inroads. Even at the time when China was extremely poor, China was willing to share the little she had with Africa,” Mwencha said.

You are here: Home/News/Article/Deputy AU chairperson says AGOA requires some changes to fully benefit Africa