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AGOA review focuses on need for 2015 update

AGOA review focuses on need for 2015 update
Published date:
Thursday, 05 September 2013

With the African Growth and Opportunity Act (AGOA) set to expire in September 2015, African and US representatives have begun to explore how Washington can improve and renew the 13-year old legislation so that it is more compatible with the changing economic landscape in Africa.

AGOA provides about 6500 African products with preferential quota and duty-free access to the US market. The bill expands upon the US Generalised System of Preferences (GSP), a set of formal exceptions from the WTO’s most-favoured nation (MFN) principle that allows Washington to offer developing countries preferential treatment on specific goods.

The GSP expired in late July; however, trade observers expect it to be renewed in the months ahead.

The Obama Administration has already committed to a “seamless” AGOA renewal, while also stressing that it wants to review and update the programme. African delegates are pushing for a ten-year extension of the arrangement to foster long-term investments.

For instance, the US is looking to learn from Africa’s existing trade relationships with the EU and its member states, US Trade Representative Michael Froman said at the AGOA Forum, an annual event that was held in Addis Ababa, Ethiopia last month. The European Commission is working to conclude Economic Partnership Agreements (EPAs) with several African countries by 2014; these would, if fully ratified, enable the establishment of a free trade area between the EU and these nations.

Unlike EPAs, AGOA is non-reciprocal and unilateral. Therefore, the preferences apply only to imports entering the US, and the renewal of the legislation depends on US lawmakers. Some US experts argue that Washington should focus more on two-way trade agreements with Africa, particularly with more advanced countries like South Africa, given their rapid economic growth in recent years.

The Obama administration plans to examine the thousands of duty-free tariff lines covered by AGOA to determine if some sectors or countries should gradually be eased out as they become more competitive, along with reviewing options for lowering trading costs in the African continent.

“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,” Froman said.

Froman stressed that AGOA has helped African firms become more competitive both in the US and internationally. Some commentators however, argue that AGOA has actually had only a limited impact on least developed countries’ (LDCs) economic transformation, given that key products - such as dairy, sugar, cocoa, peanuts, and cotton - are excluded.


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