TRALAC - Trade Law Centre

African countries 'still need AGOA'

Sunday, 10 April 2011

Source: Sunday Times (South Africa)

More must be done to highlight to US lawmakers the significant contributions made by the Africa Growth and Opportunity Act (AGOA), which expires in 2015, to the South African economy, lobbyists said this week.

Agoa grants duty- and quota-free market access for more than 7000 products to qualifying countries in sub-Saharan Africa. While Agoa's success is often questioned due to the dominant role that oil still plays in the export mix, the legislation has assisted the development of several other industries on the continent. In particular, it has boosted automotive, clothing, fruit and horticulture exports to the US.

Despite the crucial role Agoa plays in especially the South African motor vehicle industry - the country's major manufacturing sector - Deputy President Kgalema Motlanthe made no mention of the legislation in his speeches in Washington during a recent visit to the US.

"We know that Agoa is important to SA's continuing success, given its status as the number one diversified, non-oil exporter under the arrangement, so it's imperative for our policymakers to know this as well," said a spokesman for The Whitaker Group.

The consultancy is led by Rosa Whitaker, a key Agoa lobbyist who was assistant trade representative for Africa when it was enacted in 2000.

A motor vehicle industry source expressed concern over the government's apparent lacklustre approach regarding Agoa.

"Either government doesn't care, as they believe BRIC (Brazil, Russia, India and China) will make up for the shortfall, which is very worrying, or they simply don't have the human resources to properly analyse the issue and put the proper policies in place. I sincerely hope it's the latter," the source said.

Eckart Naumann, associate at the Trade Law Centre for Southern Africa (Tralac), said: "For a number of countries, Agoa is absolutely critical, especially for clothing."

Favourable market access to the US has allowed clothing industries to flourish in a number of countries, particularly Lesotho, Kenya, Swaziland and Madagascar, as well as Mauritius and Malawi.

At present, several lesser developed Agoa beneficiaries are allowed to use imported textiles from outside the Agoa group for clothing destined for the US . This provision will expire in September next year, and countries should start lobbying as a matter of absolute urgency to have this extended further, said Naumann.

"The US legislative process is very complicated and long-winded, and it can take months and months to get issues tabled. It has to be approved by the House of Representatives and the Senate, and then the president can just walk away from it. Nothing is a given with this, and the current political landscape with the House of Representatives having reverted to a Republican majority while the Senate has a reduced Democrat majority has led to a divided legislature and tensions in the law-making process," he said.

"Lobbying really should've started already on this. The world doesn't wait for us."

Should the US allow these provisions to expire, it can be seen as a sign that there is no appetite to extend Agoa beyond 2015, said one trade policy analyst, who asked to remain anonymous. The extension of special textile provisions is expected to be placed on the agenda by African governments at the next Agoa summit, scheduled for June in Lusaka.

Trade and Industry Minister Rob Davies said the message to the US has repeatedly and consistently been that African countries support a rollover of Agoa for a reasonable period.

Davies said countries supported a single set of rules under Agoa, as this would assist regional integration on the continent.

While Congress is likely to extend Agoa for a fourth time, according to the Whitaker spokesman there may be "Agoa fatigue". "Lawmakers have grown accustomed to us ringing alarm bells every few years and to responding by continuing to pass short extensions, rather than granting investors what they need - the certainty that Agoa benefits will be available to them indefinitely.

"If there is no concerted coalition effort to extend and expand Agoa in a comprehensive manner, it may again receive short-term, short-sighted treatment."

By Jana Marais / Sunday Times.