Africa’s position on post AGOA Forum Report
The African Ministers of Trade tabled an Africa position in the 15th Africa Growth and Opportunity Act (AGOA) Forum, held on 26 September 2016 in Washington DC, United States.
The position is on the report titled “Beyond Agoa: Looking to the future of the U.S. – Africa Trade and Investment” issued by the US on 22 September 2016, as required by Congress in line with the AGOA Extension and Enhancement Act of 2015.
The Forum is an annual event that alternates between Sub-Saharan Africa and the United States; the 16th Forum will be hosted by Togo.
The Ministers said they consider the Report as a start of a conversation on trade and investment relationship beyond AGOA. The African side will study the Report with a view to develop a position that is in line with the continental agenda and its objective to industrialise.
AGOA is a non-reciprocal preferential programme that provided duty-free quota-free treatment to Sub-Saharan African countries into the United States market. The Ministers expressed a concern that the report is orientated towards a high standard reciprocal trading arrangement that covers a range of policy areas that may have implications for Africa’s efforts to industrialise and promote economic transformation.
African Ministers of Trade initial response included the following:
1. Sub-Sahara African (SSA) countries are concerned by the absence of asymmetry and differentiations in commitments in the US proposals and emphasize the need to take into account differences in levels of development.
2. SSA is also concerned by the proposed scope of the agreements envisaged by the US, which goes beyond agreements negotiated by African countries thus far. In addition the commitments on policy issues will limit the policy instruments that are necessary to promote industrialization and diversification. Sustainable development of the African continent will depend on its ability to promote economic transformation and move away from heavy reliance on primary products.
3. Any trade and investment relationship with the US should assist the continent to industrialise in line with Agenda 2063 and contribute to regional integration.
4. They emphasised the importance of creating an AU Task Force to develop Africa’s strategy for trade and investment relationship with the US. The strategy will take into account challenges facing African countries in taking advantage of AGOA. To this end, the US is encouraged to provide incentives to its companies to invest in the continent to improve productive capacity to increase AGOA utilisation.
5. The relationship with the United States should be structured to support regional integration in Africa.
The Ministers also expressed their concern on the level of underutilisation of AGOA preferences by Sub-Saharan African countries. Under-utilisation is due to stringent standards and rules of origin which make it difficult for African products to meet the US market. In addition, African countries are unable to leverage the US market due to productive and supply-side capacity constraints. In this regard, African countries have prioritised industrial development, the development of regional value-chains and regional integration. The Ministers have thus called on, among others,
1. The United States to encourage its companies to invest in the Continent in support of industrialisation agenda and to create productive capacity that will enable Africa to take advantage of the trade preferences.
2. In addition, trade and economic cooperation arrangements should mainstream Africa’s major economic development initiatives in the Agenda 2063 including BIAT/CFTA, PIDA, AIDA, CAADP and other regional integration programs and projects that have been designed to contribute to Africa’s transformation.
3. Power Africa, an initiative of the US is welcomed and the US is urged to expand the program to cover trade related infrastructure beyond the power sector.
4. US institutions in-charge of SPS and TBT related matters should work closely with AGOA eligible countries to provide capacity building to enable African countries to meet US standards within a timeframe of 3 to 5 years.
5. The US government is urged to bring greater flexibility in the application of rules of origin. The Ministers emphasised that AGOA eligible countries should be included in the list of designated countries under the Trade Agreements Act (19 U.S.C.& 2501 – 2581) that require the US Government to acquire only US made or designated country end products.