TRALAC - Trade Law Centre

Africa unsure how a post-Obama administration will treat AGOA

Sunday, 30 October 2016 Published: | Kevin J Kelly

Source: Daily Nation (Kenya)

Apart from the bogus "birther" claim that President Obama was born in Kenya, Africa has barely been mentioned by either Hillary Clinton or Donald Trump during the campaign.

That silence extends to the African Growth and Opportunity Act, which allows most products from 38 eligible sub-Sahara countries to export goods to the US duty-free.

Sixteen years since its launch, Agoa has not driven industrial development in Africa as had been anticipated.

But the programme has served as a catalyst for increased textile production and associated job growth in Kenya and other countries. Agoa is viewed positively even in countries where its benefits have not been felt.

A few American trade unions initially voiced reservations about Agoa on the grounds that it could kill textile jobs by making it cheaper for apparel companies to import goods from Africa.

But in the years following its enactment during the presidency of Bill Clinton, Agoa has stirred little opposition from Democrats or Republicans, largely because it has not amounted to much of a threat to US workers.

The Congress recently approved a 10-year extension of Agoa with strong support from members of the major parties.

Trade deals criticised as harmful to US economic interests have, however, emerged as a key issue in the race for the White House.

Trump has been forceful in condemning such agreements, and the resonance of his arguments has led his Democratic rival to take a similar stance.

The candidates' expressed opposition to trade schemes favourable to exporters in the developing world raises the question of whether the next White House occupant might want to undo or weaken Agoa.

Should Trump overcome odds against winning the November 8 election, he could include Agoa as part of a general offensive against US trade agreements.

"But the Republican leader will not have the support of Congress to reverse Agoa, even if he wants to," said head of the Washington-based Corporate Council on Africa Stephen Hayes.

Clinton may adopt a cautious approach towards free-trade deals.

"For most of her adult life, she has supported such agreements. Agoa legislation will not be reversed but will run its 10-year course," said the leader of an association that includes nearly all US firms doing business in Africa.

AFRICA TRADE

"Agoa has had little impact on US jobs going overseas, a principal reason for a growing anti-globalism movement."

Stephen Lande, the head of a Washington consulting firm focused on Africa trade, said there was little danger of Agoa being scaled back.

He said any threat to the programme would not arise from political factors in the US but from what Washington viewed as potentially unfair competition on the part of the European Union.

African regional trade blocs are in talks with the EU on deals that would allow EU goods to enter the continent duty-free.

Michael Froman, the Obama administration's top trade official, has said business relations may be affected with countries that put US exports at a disadvantage as a result of preferential deals with the EU.

He added that a more positive point worth considering was how a Clinton administration could seek to expand trade with Africa.

"Agoa could be improved by liberalising its rules of origin," he said.

The rules require that products intended for the US market must include a substantial share of Africa-made components.

Agoa already includes a third-country fabric exemption, allowing apparel processed in Africa from yarn made in Asia to remain eligible for duty-free entry to the US.

"Such treatment could be extended to other goods shipped to the US from Africa," Lande, the president of Manchester Trade, said.

He also cited Africa's agriculture as offering potential for growth through Agoa or another trade programme known as the Generalised System of Preferences.

The US could allow farm products such as leaf tobacco and sugar to qualify as duty-free imports.

He added that a Clinton administration might promote economic development in Africa more effectively by focusing on regional trade integration rather than on Agoa.

The White House could develop incentives for countries in other parts of the continent to make as much progress on integration as has the East African Community.

"Africa is a much stronger negotiator as a group than as a collection of individual countries," Mr Lande observes.