US and African delegates will meet next week (August 12-13) to discuss the future of the African Growth and Opportunity Act, or AGOA. Representatives of government, private sector and civil society will hold talks Monday and Tuesday in Addis Ababa, Ethiopia.
Over the past decade, the US legislation has dropped tariffs on 1,800 African imports, including agricultural products, apparel and some textiles. Analysts say it’s also helped create hundreds of thousands of jobs on the continent.
Participants will focus how to improve, and renew, AGOA, which is set to expire in September 2015.
The forum will look at AGOA’s successes and challenges. US Trade Representative Mike Froman will lead a delegation including officials from USAID and the Departments of State and Commerce.
AGOA’s successes are many: Since coming into force 12 years ago, it has boosted trade between the US and sub-Saharan Africa. US officials say today the US imports over $35 billion worth of goods from the continent, much of it natural resources, and non-oil imports have tripled. They include such value-added products as vehicles, apparel, manufactured goods and processed agricultural products like fruits and nuts. In return, the US exports $22 billion of goods to Africa.
US officials say the forum will provide an opportunity to evaluate AGOA and see how it can be improved to boost job creation, growth, and trade –especially in non-oil products.
Florizelle Liser, the assistant US trade representative for Africa in the Office of the US Trade Representative, said "The [Obama] administration has already committed to have a seamless renewal of AGOA, but we want to make sure that we know all that AGOA has done. We want to know what the current challenges are to its further utilization, and this public review process will help us to do that. And of course, all of this will be towards the end of working with the US Congress, because AGOA is their baby as well as ours."
The forum will also include an event arranged by the Ethiopian African Women’s Entrepreneurship Program and a US / sub-Saharan Africa Trade Exhibition arranged by the Ethiopian Chambers of Commerce and Sectoral Associations and the Corporate Council on Africa (or CCA).
John Anderson, the acting assistant secretary for market access and compliance with the US Department of Commerce, said during the session, the CCA will partner with the United States, African private sectors, governments, and other stakeholders to provide a platform for companies to identify opportunities, execute deals and network with African decision makers across many sectors.
"It will be dedicated to identifying opportunities for the United States and African private sectors to take full advantage of AGOA’s benefits and collectively pursue approaches that could increase the flow of trade and investment into Africa," he said.
The views of the US Congress and the Obama administration will be an important part of forum sessions, as will be Africans’ perspectives on AGOA and their goals for economic relations with the US.
Ultimately, Congress will decide whether – and for how long – to extend the legislation. Legislators will also be looking at the domestic benefits to the US, and to what extent Africans reciprocate by opening their own markets to American investors. Liser said some will be comparing US and European access to African markets, now that many African governments are negotiating economic partnership agreements (or EPA’s) with the European Union.
"Those agreements," she said, "are supposed to be finalized by 2014. So even before AGOA has ended this time, the Europeans are already going to be getting duty-free access or lower tariff access into African markets that we’re interested in.
"So here’s the question that people in Congress and our businesses are asking: Why should the United States, which also has an interest in African markets and also has partners in Africa and joint ventures in Africa – why should we continue to give access to the Africans duty-free into our market while they give better treatment to the Europeans into their markets? What’s the reason why we would give them 10, 15, 20 more years of AGOA under those circumstances? "
African trade hubs
US officials say the AGOA forum will also give them a chance to highlight Obama administration initiatives aimed at boosting investment and economic growth on the continent. That includes its “Doing Business Campaign” which helps US businesses take advantage of investment opportunities in Africa.
Liser said an important part of the effort is using regional trade hubs in Kenya, Botswana and Ghana to help small entrepreneurs understand AGOA and make their products competitive on the world market. The US works to bring them to trade shows where they can meet US buyers and potential partners for joint ventures.
"I have been to a number of Ethiopian factories which have been started by Ethiopian Americans, people who lived here for 10, 15, 20 years, [and] have gone back to Ethiopia," explained Liser.
"One apparel factory that we went to is doing fantastically and shipping scrubs for people in the hospitals and stuff here, doing very, very well, as well as other products that they’re doing, and that is an Ethiopian-American that runs that. So I have been to a number of factories like that in Ethiopia and in other countries that are AGOA-eligible."
The forum will also give the US a chance to highlight its economic goals for Africa, including the creation of value-added products such as processed coffee, teas or fruit juices for export rather than raw materials. Liser adds that although China has exceeded the US in trade with Africa, the US still remains the continent’s largest market for value-added products.
Another goal is regional integration, which Liser says would help create economies of scale for regions with small, fragmented and often landlocked markets.
"We in the US," she said, "are encouraging the Africans to do everything they can to liberalize their markets, to advance regional integration so that…any of the companies looking at establishing a business in one country can say, 'Okay, if I go into Burundi, I will also have access to Kenya and Rwanda and Uganda and Tanzania, because the five of them are in a regional economic community together.' ”
Global value chain
She said integration also brings African countries into the global value chain.
"Maybe in 20 years, the automobiles coming into the US will be made in Africa," she said. "But I’m saying even right now, we have automobiles coming into the US. produced in South Africa, lots of them coming in. And one question for Lesotho and the countries surrounding South Africa now is: Are there parts that you could make in that value chain that would go into automobiles that South Africa is shipping to the US. right now, BMWs and Mercedes-Benzes? Could you make the mirrors, the rugs that go on the floor? Could Botswanan leather and Namibian leather go into the seats that are in those cars? And that’s how the global values chains work."
Thirty-nine African countries are currently taking advantage of duty-free exports to the United States under AGOA. They include Angola, Nigeria, Mozambique, Rwanda, Burundi, South Sudan, Kenya, Uganda and Tanzania.
Eligibility for AGOA is based on a number of criteria related to good governance, including laws ensuring human and labor rights, steps toward opening the economy to trade and investment and progress in fighting corruption. Liser says eligibility is reviewed yearly, and countries that are not part of AGOA today can eventually take part – if they make the necessary political and economic reforms.
Listen to report on AGOA Forum