Agoa.info - African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/Letter from Washington: AGOA hostage to party political manoeuvring

Letter from Washington: AGOA hostage to party political manoeuvring

Letter from Washington: AGOA hostage to party political manoeuvring
Simon Barber [Credit: Africabusinessconference2014.com]
Published date:
Thursday, 26 March 2015
Author:
Simon Barber

The African Growth and Opportunity Act (Agoa) will be renewed before it expires in September. That’s a solid bet. When, exactly? For how long? And will SA be treated the same as other African beneficiaries? Those are questions awaiting an answer.

Holding things up is strong opposition from most Democrats, and some Tea Party Republicans, to giving US President Barack Obama "trade promotion authority" (TPA). He needs this to conclude his Trans-Pacific Partnership (TPP), a trade pact with 11 "like-minded" nations — China is not on the list — that rim the Pacific on both sides.

Republicans are using Agoa as a hostage to obtain the Democratic votes they need to give TPA to Obama, with whom on this they are in rare agreement. Without TPA, there will be no TPP. Japan, New Zealand and other partners have said they will not make final offers without assurances that whatever Obama gives them in return will not be tampered with by Congress.

The Democrats may be in the minority in both the House of Representatives and the Senate, but because of dissension within their own ranks, Republicans need help from the Democrats to give Obama what he wants. They have yet to get it.

The American Federation of Labour and Congress of Industrial Organisation, a labour federation, blames stagnant incomes and rising inequality on too much free trade. It has promised to withhold campaign money from any Democrat who votes for TPA. For some, the threat is serious enough: there is no upside. Come next year, business is going to fund their Republican opponents whatever they do.

Senator Elizabeth Warren, the new Pasionaria of the Democratic left, is sounding a lot like SA’s Trade and Industry Minister Rob Davies in her opposition to the proposed TPP investor-state dispute mechanism that takes matters out of countries’ own jurisdictions.

House minority leader Nancy Pelosi says she won’t support TPA until she’s seen the final agreement. Ron Wyden, ranking minority member of the gatekeeping Senate finance committee, wants a clause that will allow Congress to make changes to any agreement before approving it.

It’s hard to judge what will happen to the Agoa hostage. Will it be released if the TPA standoff hardens into deadlock? There is plenty of precedent for things going down to the wire in September, by which time Agoa-dependent clothing exporters such as Lesotho stand to have lost orders worth hundred of millions of dollars.

The renewal legislation is still being drafted. Between the administration, most Democrats and the beneficiaries, the consensus is for a 15-year extension. Republicans want less, perhaps five years, for the sake of fiscal hygiene. There is also a view that long-term renewal of nonreciprocal access to the US market lowers incentives for African countries to open their own markets in return. That could be taken care of by putting beneficiaries on notice, with deadlines, that Washington requires real progress towards reciprocity from countries that wish to remain eligible for Agoa. Care would have to be taken that this did not interfere with regional integration.

As the cornerstone of Obama’s Trade Africa initiative, foundations are being laid for a free-trade agreement with the East African Community. This could set the standard required of everyone else.

US policy makers have never entirely rid their nostrils of the smell of skunk that lingers from the failure of the negotiations on a US-SA free-trade agreement encouraged by the original Agoa. Complaints from US multinationals that they now face higher tariffs in SA than their European Union competitors have not helped clear the air.

Then there is the chicken matter, with its noisy champions in the Senate, along with niggles over beef and pork. And let’s not overlook the Obamacrats’ irritation with SA’s refusal to give up its stockpile of weapons-grade uranium, which could put it athwart Agoa’s national security clause.

Nor to be overlooked is the sophistication of SA’s economy, or its much-vaunted membership of Brics (Brazil, Russia, India China, SA), or the ruling clique’s concomitant contempt for the US, or that no one saw Agoa being used by locally subsidised German car makers to improve their US margins. All told, there’s a case to be made to treat SA differently in the new act.

The good news is that US companies are lobbying hard for SA’s continued inclusion. The rest of Africa is largely supportive as well. Botswana sells leather to those German car makers.

 

• Simon Barber is a freelance journalist

 

Read related news articles

Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship

As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country.  I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...

13 March 2024

South African president Ramaphosa meets with US congressional delegation

South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...

21 February 2024

US and African civil society stakeholders seek AGOA extension

A Civil Society Organisation, Network and other stakeholders from across the United States and African Growth and Opportunity Act-eligible countries have petitioned the President of the United States of America, Joe Biden, to consider an extension of the initiative. The CSO made the plea in a letter dated February 16, 2024, titled ‘Petition for Timely Re-Authorisation and Enhancement of the African Growth and Opportunity Act Beyond...

16 February 2024

US congress receives Bill to review South Africa relations

A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...

09 February 2024

House Ways and Means Committee leadership statement on meeting with ambassadors from select AGOA countries

Ways and Means Committee Chairman Jason Smith (MO-08) and Ranking Member Richard E. Neal (MA-01) released the following statement after hosting a bipartisan roundtable with Committee members and ambassadors from several African Growth and Opportunity Act (AGOA) countries. AGOA is a U.S. trade program focused on strengthening economic ties between the United States and nations in Sub-Saharan Africa. “We appreciate the ambassadors from...

18 January 2024

Fitch research unit expects better AGOA deal for South Africa

Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...

09 January 2024

South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities

Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...

20 November 2023

WEF - How has AGOA benefited African countries?

The African Growth and Opportunity Act (AGOA) is a trade agreement between the United States and sub-Saharan African countries. Agoa has helped to increase trade and investment between Africa and the US. It has also helped to create jobs and boost economic growth in Africa. African countries are calling for it to be extended. To what extent has the AGOA goal been achieved? The duty- and quota-free access to the US market granted by Agoa...

16 November 2023

South Africa’s AGOA forum: Crafting future pathways for US-Africa trade partnership

Ultimately the African Growth and Opportunity Act (AGOA) could be extended by 16 years, that means until 2041, indicating its importance for strengthening Africa’s trade and economic cooperation with United States. That was, in fact, the main focus during Johannesburg’s early November forum that brought together more than 30 trade ministers, astute investors plus representatives from the regional economic blocs and the African Union. At...

14 November 2023

Africa-US trade: AGOA expires in 2025 - what has it achieved in 23 years?

African governments are seeking an extension of the African Growth and Opportunity Act (Agoa) beyond 2025. The law was enacted in 2000 to “encourage increased trade and investment between the United States and sub-Saharan Africa”. We asked David Luke, who specialises in African trade policy and trade negotiations, what benefits Agoa has brought for qualifying African countries and how it can...

12 November 2023

US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa

President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...

09 November 2023

You are here: Home/News/Article/Letter from Washington: AGOA hostage to party political manoeuvring