TRALAC - Trade Law Centre

African countries want AGOA extension

Monday, 20 June 2011

Source: East African Business Week

African countries eligible for the African Growth and Opportunity Act (AGOA) have decided that extending the duty free trade relations from the initial 2015 to 2025, will form a strong basis for their engagements with the US.

African Ministers at the just-concluded AGOA 2011 Forum in Lusaka, Zambia, also demanded that the Third Country Fabric, a provision that allows least-developed African nations to make apparel using fabric from nations other than the US and African nations, extended from 2012 to 2025.

Despite its great efforts, sub-Saharan Africa continues to suffer from challenges like poor infrastructure, poor financing, delays in customs clearance, high transportation and energy costs and limited regional cooperation.Initially, AGOA was set to expire in 2008. In 2004, the US extended the AGOA mandate to 2015.

The Act's apparel special provision, which permits lesser-developed countries to use foreign fabric for their garment exports, was to expire in September 2007.

However, legislation passed by Congress in December 2006 extended it to 2012.

“AGOA should not just be about exports but about attracting American investors into Africa to partner with business people so as to make AGOA a reality,” said Mrs. Susan Muhwezi, Uganda's Special Presidential Assistant on AGOA and Trade at the forum, which was hosted at Mulungushi International Conference Center.

Mrs. Muhwezi said America needs to help African countries by rendering infrastructure development and technical capacity.

Signed into law on May 18, 2000 by former US President, Bill Clinton, AGOA offers tangible incentives for African countries to continue their efforts to open their economies and build free markets.

African countries recognized that since its implementation 10 years ago, AGOA had contributed much to the creation of jobs, boosted trade between Africa and the US, and provided African products the necessary competitive edge to be successful in accessing US markets.

However, they contend that the act should be reformed, and that the US should, in the next phase of implementation, invest more in Africa's infrastructure and trade capacity building, diversify its imports from African countries and ease US requirements on imports of African textile products so as to make African countries fully benefit from the initiative.

Addressing delegates at the Lusaka forum, US Secretary of State, Hillary Rodham Clinton, said in the past decade, Africa's exports to the US have quadrupled, to $4 billion without counting oil.

Clinton said although Africa still faces challenges in many areas, productivity has been rising with consumer spending in the region projected by almost $600 million, and Gross Domestic Product (GDP) by $1 trillion in less than a decade.

“All of us who care about the success of AGOA have hard choices to make. As we look to renew this trade agreement-and let me say clearly that the Obama Administration will work with Congress on a seamless renewal of AGOA beyond 2015,” Mrs Clinton said to the applause of African ministers and delegates.

“We must decide whether we are willing to do what is necessary to make the most of its benefits. We can either move ahead, or risk failing to live up to the hopes we all shared 11 years ago”.

Trade statistics show that US imports from the sub-Saharan African countries are mainly from three sectors, including energy-related products, textiles and apparel and transportation equipment.

Agricultural products, minerals and metals from the African countries are also finding their ways to the U. S. market.

But compared with the above-mentioned sectors, their trade volumes are very low. While agriculture remains the mainstay of African economies, trade figures show that agro-related exports from Sub-Saharan Africa to the US under AGOA is too low, only accounting for 1%.

About African 25 countries attended. The next meet will be in Ethiopia in 2013.




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