- African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/US seeks better access to Africa as part of AGOA review

US seeks better access to Africa as part of AGOA review

US seeks better access to Africa as part of AGOA review
Published date:
Monday, 12 August 2013
Katrina Manson

The US will launch a review of its 13-year-old preferential trade agreement with sub-Saharan Africa on Monday that will consider asking the region to offer better commercial access to American companies.

The African Growth and Opportunity Act (AGOA), originally crafted under President Bill Clinton in 2000 and renewed by George W Bush, has become a cornerstone of US-Africa economic relations worth $58bn for business on both sides of the Atlantic.

But it is due to expire in 2015, just as growth in Africa gains traction and global competition to attract trade and investment deals there intensifies.

President Barack Obama has committed to a “seamless” renewal of the AGOA agreement, which gives sub-Saharan countries duty-free access to the US for products from crude oil to seafood. But Mike Froman, US trade representative, said he plans to warn African countries on Monday at a closed-door trade meeting in Ethiopia’s capital that Washington also wants to see better access to Africa.

“As we think about renewing AGOA, we certainly do not want US firms to be put at a competitive disadvantage in the rapidly growing and dynamic African market,” Mr Froman will say in his speech.

Washington is mindful the EU’s trade talks with sub-Saharan Africa, which are expected to produce an agreement in 2014, may secure Europe better access to African markets than the US, unless AGOA is renegotiated.

“We have until September 2015 and we want to get started now with two years runway so we have the time to do a good proposal,” Mr Froman said in a phone interview before his trip to Addis Ababa, Ethiopia’s capital. He said the review should take several months and its conclusion will ultimately be down to Congress.

Last year, an extension over textile provisions, which are renewed separately, was held up in Congress until the eleventh hour because of political deadlock, provoking some buyers to cancel forward contracts with African producers owing to the uncertainty.

Mr Froman will stop short of making any prediction about the likely duration of any renewed pact, which has been extended three times to date. African representatives are arguing for a minimum 10-year extension of the deal to encourage long-term investments instead of piecemeal timeframes that make it difficult to plan.

Mr Froman will also ask whether some sectors or countries should gradually be eased out of AGOA as they become more competitive.

“AGOA was never intended to be a permanent preference programme, nor should it be,” Mr Froman will tell representatives at the opening session of a two-day ministerial forum, which he will co-host with Uganda’s trade minister, Amelia Kyambadde. “Duration will certainly be . . . part of this review,” he said.

Petroleum products make up 80 per cent of African goods exported under the pact but the value of non-oil exports such as textiles, which as a whole fall under AGOA, spare vehicle parts, coffee, precious metals, and fruits and nuts is also growing from a low base. The US is keen to support the expansion of value-added exports that process and package raw materials in the region.

In addition, the US wants to secure a growing market place for its own products among the subcontinent’s burgeoning middle class. Mr Obama repeatedly emphasised the benefits of trade with Africa to US jobs and the economy in his regional tour last month. US exports to sub-Saharan Africa rose to $23bn last year, from $7bn 11 years ago.

Tariff and quota-free access of some products that are produced on both sides of the Atlantic, such as peanuts and cotton, are sensitive, and may affect some reciprocal arrangements.

“We will be frank about our sensitivities, and I’ll expect the same candour from you,” the text of Mr Froman’s speech says. “We should drill down into the thousands of duty-free tariff lines under AGOA and ask if they are appropriate for eligible exporters.”

The US stipulates that eligible countries must meet minimum standards, such as upholding the rule of law, and this year admits 39 of the subcontinent’s 48 countries. Democratic Republic of Congo, Madagascar and Zimbabwe are among those excluded.

Mr Froman stresses that other forms of US assistance such as extending electricity to the continent, two-thirds of which goes without power, and helping to reduce intra-regional trade barriers, would all help put the subcontinent on a more even competitive footing in the longer term.

Read related news articles

The AGOA Forum: Promoting sustainable growth in Africa through trade and technology

This week in Addis Ababa, Ethiopia, U.S. Trade Representative Mike Froman and senior members of the President's economic team joined trade ministers, civil society, and business leaders from across sub-Saharan Africa to focus on "Sustainable Growth through Trade and Technology" at the African Growth and Opportunity Act Forum. The Forum also kicked off the process leading to AGOA’s renewal in 2015. As the President highlighted on his trip to...

16 August 2013

Remarks: AGOA’s future – Dialogue with members of Congress

Your excellences, distinguished and honored guests, good morning. It is wonderful to be with you today in Addis Ababa, at the headquarters of the African Union, and most importantly, at the 2013 AGOA Forum. Before I begin, I want to take a moment to acknowledge and thank Florie Liser for her leadership and stellar work she has done on AGOA for many years now. I for one am grateful for the assistance she has provided my office, and the...

14 August 2013

USTR Mike Froman's address at the AGOA Forum 2013

“Good morning.  Welcome ministers and ambassadors, legislators and Members of Congress, private sector and civil society leaders, ladies and gentlemen.  It is my great honor to be back for the AGOA Forum.  Last year in Washington, I had the opportunity to share with you President Obama’s new U.S. Strategy toward Sub-Saharan Africa.   President Obama’s Strategy for Sub-Saharan Africa  “The Presidential Policy...

13 August 2013

US eyes competition with Europe for Africa trade

The United States is keeping a close watch on potential European trade deals with African nations as Washington reviews its own preferential trade initiative with the continent. African ministers and U.S. officials discussed trade relations at a forum Monday in the Ethiopian capital Addis Ababa. The U.S. is considering an extension to the popular African Growth and Opportunity Act, known as AGOA, an American law that allows sub-Saharan...

13 August 2013

Africa: AGOA not imperiled after all?

On July 31, 2013, the US Generalized System of Preferences (GSP) - a program established by the Trade Act of 1974 expired semi-surreptitiously; something that may not augur well for a more comprehensive American trade and investment program for Africa. Twin bills (download Bill H.R. 2709 alongside) in the House and Senate to extend GSP provisions until September 2015 simply did not come full circle, and anyone keen on an improved African...

12 August 2013

Kenya in AGOA 'hitch'

Kenya continues to benefit from the trade preferences to the US market in the African Growth and Opportunity Act (AGOA), but Americans are raising some concerns about corruption. "Part of our ongoing conversation with Kenya is addressing a host of issues in the business environment," David Renz, a counselor for Economic Affairs at the US Embassy in Nairobi said recently. This year's AGOA Forum is set for this week in Addis Ababa,...

12 August 2013

USTR Mike Froman encourages US-Africa economic expansion

Business and government representatives from the United States and sub-Saharan Africa should work to expand their economies together, learning from their successes and from other trading partners, says US Trade Representative Michael Froman. Speaking on the first day of the two-day forum on the African Growth and Opportunity Act (AGOA) in Addis Ababa, Ethiopia, Froman said forum representatives need to prepare for a new AGOA after the current...

12 August 2013

US seeks new trade deal with a changing Africa as AGOA talks kick off

It is a longstanding policy of the United States to grant preferential trade deals to developing countries, in order to promote good relationships and to support growth for smaller economies. But what happens when those developing countries begin picking up the pace, leveraging their resources as they benefit more and more from favorable export agreements -- possibly at the expense of their more developed trade partners? That's the question...

12 August 2013

AGOA: African Union perspectives on its future

The African Union Commission (AUC), on 12 August 2013, hosted the Ministerial Session of the 12th Annual AGOA Forum in Addis Ababa, Ethiopia, which was jointly organized by the Government of Ethiopia and the United States of America. Addressing the forum, the Deputy Chairperson of the AUC, Mr. Erastus Mwencha stressed the importance of the theme, “sustainable transformation through trade and technology”, which was carefully selected in...

12 August 2013

Africa makes a strong case for continued preferential trade with the US

Trade relations between the USA and African countries benefiting from the Africa Growth and Opportunity Act (AGOA) come under serious scrutiny at the 12th AGOA Forum that has started in the Ethiopian capital today, to run till Tuesday 13 August. This year's edition of the annual Forum focuses on Africa's sustainable transformation through trade and technology and will mark a milestone in the Africa-US trade deal initiated in the year 2000 to...

10 August 2013

You are here: Home/News/Article/US seeks better access to Africa as part of AGOA review