The African Ministerial Consultative Group meeting held in Lusaka on June 8th has accepted Ethiopia's offer to host the 12th Africa Growth and Opportunity Act Forum (AGOA) to be held in 2013. AGOA Forum meetings which bring together government officials, civil society representatives and business leaders from both the United States and Africa are held alternately in the United States and in one of the AGOA eligible countries in Africa. This year’s AGOA meeting was held in Zambia, and AGOA 2012 will be held in the USA.

AGOA represents U.S. trade and investment policy towards Africa. It was set up with the specific objective of increasing and diversifying African exports to the US market and increasing US investment in Africa. It provides trade preferences to 37 Sub-Saharan African countries, offering duty free access to the US market for around 1,600 product tariff lines. The items include clothing, footwear, wine, certain motor vehicle components, a variety of agricultural products, chemicals and steel. AGOA was signed into law in May 2000 by the then president Bill Clinton. The Act originally covered an eight year period up to September 2008, but an extension was signed by President George Bush in July 2004 for AGOA to extend to 2015.

The agenda at this year’s Lusaka meeting and the Africa's Ministerial Consultative Group’s discussions were overwhelmingly dominated by the uncertainty surrounding the fate of AGOA after 2015. Almost every African minster and delegation member made clear that they would like to see AGOA extended after 2015 for at least another 10 years. The African Ministerial Consultative Group meeting in its final communiqué agreed on a statement on "the need for extension of AGOA beyond 2015" as the basis of its engagement with the USA.

Another subject of major importance at Lusaka was the question of the third country multi-fiber provision. This is due to expire in 2012. The rules of origin for fabric under AGOA provide for one of the most important incentives to invest in textile production in AGOA eligible countries. The provision allows textile producers in AGOA countries to source their raw materials from other countries and still maintain their preferred access to the U.S market. Here, too, African ministers requested the U.S to allow "the third country fabric provision to run concurrently with AGOA."

The reaction of the U.S. delegation headed by Secretary of State, Mrs. Hillary Clinton, was very positive. Indeed, all the US delegation members who spoke at the Forum reassured their African colleagues that the U.S administration would work towards extending these two provisions of AGOA. In her closing remarks, Mrs. Clinton said that the Obama administration would work with Congress “on a seamless renewal of AGOA beyond 2015 and on a renewal of the important third country fabric provisions in the coming months." However, this will, of course, depend upon Congress, and by no means all US Administration agencies take the same view as the delegation at Lusaka. Nevertheless AGOA has bipartisan support in Congress and it remains likely that it will be extended beyond 2015. African countries have so far not fully utilized the benefits of AGOA. This is mainly because of constraints on supply, poor transportation infrastructure, and limited production capacity. More recently, however, improvements in infrastructure and large scale investments in the textile and agriculture sectors have been taking place. For AGOA to terminate at this stage will be a setback for African exports and investment.

Ethiopia is often referred to as a beneficiary of AGOA in its export of high-end leather products, but its earnings from exports to the US markets have barely exceeded 10 million US dollars. Given the fast growth of the textile sector currently, termination of AGOA would be a disincentive to further investment in the sector. Ethiopia will therefore use its position as the host of AGOA 2013 to highlight the necessity to keep up the momentum of AGOA and ensure that Africa achieves its objectives. This was the core message conveyed by the Ethiopian delegation in Lusaka, when it expressed its interest to host AGOA 2013. In his statement to the African Ministerial Consultative Group Meeting, Ethiopia's chief trade negotiator, the Minister of Industry, Ato Mekonnen Manyazewal, urged his African colleagues to speak with one voice concerning the future of AGOA. This, he said, would have a significant impact on the perception of potential investors. He also referred to the large scale investments that a number of African counties are making in the agricultural and textile sectors with the view of exporting to the US market. He pledged that Ethiopia, in concert with all concerned parties, would work hard to let U.S partners know that it was unfair to change the rules in the middle of the game.

Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Ethiopia's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on AGOA.info include: (click each link to view)