News / Africa

    Study Weighs Benefits of US-Africa Trade Reforms

    Some of the items from an AGOA exhibit (Photo credit:  US Dept of State)
    Some of the items from an AGOA exhibit (Photo credit: US Dept of State)
    William Eagle
    Can the United States take a trade law that’s helping to increase African exports, and make it better?  That’s what African and American politicians, economists and policy makers are discussing as they consider the future of the African Growth and Opportunity Act, or AGOA. 
     
    The legislation, which expires in two years, drops duties and tariffs on thousands of products from the continent. Supporters say it’s generated hundreds of billions of dollars in trade and investment opportunities.                                                                 
    Most African development specialists and policy makers would like to see AGOA extended, at least for another ten years. Some would like to add other low income countries outside Africa or include a wider range of products. 
     
    A new study by the Washington-based Brookings Institution looks at how changes to the law might affect US trade with Africa.
     
    According to the report,  failing to extend AGOA would be among the worst options. 
     
    Curtailing wealth creation  
     
    The Brookings study says it would lead to a two percent drop in Africa exports to the United States, or about one billion dollars. 
     
    African sectors affected by the end of AGOA -- and the return of tariffs -- would include meat and dairy, leather, textiles and manufactured goods.  Limited gains made in economic diversification would disappear in many AGOA-eligible countries, as would associated employment gains.  The act has been credited with creating over 300,000 jobs in Sub-Saharan Africa. Many of those would be put at risk. 
     
    Wages for unskilled agriculture labor would be harmed particularly in South Africa and members of the Southern African Customs Union, Nigeria, and East Africa.   Pay for skilled laborers in the textile and apparel industry would drop in Mauritius and Malawi. 
     
    The advantages of extension
     
    On the other hand,  renewing AGOA would continue to improve African trade and revenues. Dropping all US quotas and duties on goods on AGOA-eligible countries would provide Africa with even greater gains.
     
    Mwangi S. Kimenyi, a senior fellow and director of the Africa Growth Initiative at the Brookings Institution in Washington,DC.,  says Africa would benefit from increased trade with the US. 

    "There’d be a big change in total value of trade between US and Africa….and because Africa is a small  global market player,  the cost to the US for allowing these  products to come into the US are extremely small,  with no major [effects] on the US economy…”
     
    In fact, he says opening the US market to these sectors would cost the US less than $10 million dollars per year, but increase African exports by $72 million dollars.
     
    In another proposed trade reform, some want to drop the 14 middle-income countries that are part of AGOA today.  The Brookings study shows that under this plan, several countries would see large drops in exports to the US. 
     
    Nigeria would lose $500 million per year from mining and energy, agriculture and food.  Mauritius would lose about $95 million dollars, with a majority from textiles.  South Africa alone would lose nearly $260 million dollars in exports (including meat and milk products), while the rest of the Southern African Customs Union would lose about $110 million.
     
    Out of Africa
     
    US lawmakers are also considering an extension of AGOA-like preferences beyond Africa to other lesser developed regions of the world .
     
    The report finds that doing so could harm African countries already enjoying AGOA-provided access to US markets. 

    "What about if you give the same [duty and quota-free] preferences to low income developing countries …. like Bangladesh and Cambodia," he asks. "Particularly in the area of textiles..  we find that African economies would not be able to sell much to the US..In fact, there would be big losses to African countries."
     
    Economic Partnership Agreements
     
    The study also considers the effect of other trade pacts, including Economic Partnership Agreements, or EPA’s, between the European Union and the developing world. 
     
    They would create a free trade area with reciprocal preferential trade agreements between the EU and countries that would belong to five EPA-created regions:  West Africa, Central Africa, East and Southern Africa, the Southern African Development Community and the East Africa Community.
     
    Kimenyi says the report is not in favor of the agreements.

    "Our model shows that….a lot of Africans would lose from EPA’s and if the US followed the same [idea], using EPA’s….it would be bad for Africa," he said..
     
    The report says EPA’s encourage commerce within designated regions,  but not between African countries belonging to different regional blocs.  For example, some countries bordering each other, like Mozambique and Malawi, would belong to different EPA groupings, and would each maintain high tariffs on each other.
     
    Free trade areas
     
    But the report does cite another tool for boosting African exports: free trade areas, or FTA’s.
     
    For example, it found that an FTA between the US and EU would increase world trade by up to $124 billion dollars.  It says Africa could benefit from such a deal if it implements regional trade agreements, preferably a continent-wide free trade area, or CFTA. 
     
    The report says $36 billion dollars per year in new trade would be created by dropping all quotas and tariffs between and among all countries on continent. 
     
    The resulting increase in exports could work to help offset the large loss of revenues from dropping duties and tariffs.
     
    The question now, say Africa watchers, is if there’s political will to enact the economic reforms. 

    Listen to report on Brookings study on African-US trade
    Listen to report on Brookings study on African-US tradei
    || 0:00:00
    ...    
     
    X

    You May Like

    Escalation of Media Crackdown in Turkey Heightens Concerns

    Critics see 'a new dark age' as arrests of journalists, closures of media outlets by Erdogan government mount

    Russia Boasts of Troop Buildup on Flank, Draws Flak

    Russian military moves counter to efforts to de-escalate tensions, State Department says

    Video Iraqis Primed to March on Mosul, Foreign Minister Says

    Iraqi FM Ibrahim al-Jaafari tells VOA the campaign will meet optimistic expectations, even though US officials remain cautious

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Immigrant Delegate Marvels at Democratic Processi
    X
    Katherine Gypson
    July 27, 2016 6:21 PM
    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.

    Special Report

    Adrift The Invisible African Diaspora