TRALAC - Trade Law Centre

Zimbabwe's US exports more diverse than most AGOA countries

Saturday, 20 June 2009

Source: Financial Gazette (Harare)

Africa's exports to the United States would be different if Zimbabwe was eligible for preferential treatment of its exports under the Africa Growth Opportunities Act (AGOA), an American business magnate has said.

AGOA is a duty-free and quota-free trade preference regime granted to selected African countries by the Bill Clinton administration in 2000.

Zimbabwe currently accounts for more diverse trade flows into the US than most eligible countries despite market access restrictions,

Currently 39 sub-Saharan African countries, excluding Zimbabwe, and about 7,000 products, qualify for the trade preferences, which are due to expire in 2015.

Although Zimbabwe is statutorily barred from preferential treatment in the US market due to long-drawn-out diplomatic differences with the North American power, the US is currently the country's third largest trading partner in the world after South Africa and the United Kingdom.

Statistics also show that despite facing tariff barriers, Zimbabwe currently beats 35 of the 39 eligible countries.

Eligible countries include Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Comores, Congo, the Democratic Republic of Congo, Djibouti, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Togo Uganda and Zambia.

Stephen Hayes, the chief executive officer and president of the Corporate Council on Africa, an association of 180 US companies representing about 85 percent of the country's investments in Africa, says Zimbabwe should introduce the necessary reforms to qualify for unrestricted trade as it has the industrial capacity to lift the continent's value and volume of trade.

"The American position on Zimbabwe is consistently stated - Zimbabwe should change the way business is done," says Hayes.

"Africa's exports to the US would definitely be different if Zimbabwe was eligible for AGOA because the country has the infrastructure and a diversified industrial base. At the moment very few countries are utilising the preferences."

Presenting the 2008 AGOA report to Congress, Susan Schwab, the US trade representative, said AGOA was an important tool for reinforcing African economic reforms as it had enough incentives to promote greater export diversification.

But since the programme was launched nearly a decade ago, African exports to the world's largest economy, have, however, remained overly low, low-value, commodity-intensive and undiversified.

Apart from Nigeria, South Africa and Gabon, which together account for over 70 percent of Africa's total exports to the US under AGOA, the other 36 countries have failed to utilise the preferences due to supply-side capacity constraints.

Nigeria and Gabon mainly export energy-related products, while South Africa's exports come from a more diversified industrial base such as chemicals and related industries, minerals and metals, transportation equipment, agricultural products and motor vehicles and components.

AGOA, which originally covered an eight-year period from October 2000, has been amended twice, in July 2004 to extend the duty-free provisions to 2015 and apparel provisions to 2007, and in December 2006 to extend provisions on garments to 2012. The Act is built on the Generalised System of Preferences and extends preference-based product tariff lines from 1,800 to about 7,000. The most notable products include apparel, footwear, wine, motor vehicles and motor vehicle components, a wide range of agricultural products, chemicals, steel and many others.

Despite their statutory ban, Zimbabwean companies can however participate in the 7th biennial US-Africa business summit and expo from September 30 to October 1 2009 in Washington.