The African Growth and Opportunity Act (AGOA), the U.S. government’s trade preference program for Africa, is 10 years old this month.
President Bill Clinton signed the AGOA bill into law on May 18, 2000. Since then, three successive administrations, including the Obama administration, have actively implemented the program working closely with African partners.
Assistant U.S. Trade Representative Florie Liser said AGOA has led to a significant increase in two-way trade between the United States and Africa.
“I would say that AGOA has been a success for a couple of reasons. First of all, its goal was to encourage the diversification of Africa’s trade with the United States. What has happened under AGOA is we have a number of stories in terms of the increase in non-oil trade. That has doubled in the 10 years of AGOA. And, in the meantime, U.S. exports to Africa have also grown,” she said.
Critics say AGOA has not been substantive enough and needs some redefinition. For example, they say petroleum products continue to account for the largest portion of U.S. imports from AGOA countries.
Liser said, while about 98 percent of AGOA products from Africa enter the United States duty-free, the concern lies with the supply side in Africa.
“What we are seeing, and what many of the experts are saying, both Africans and here in the U.S. is that it’s not the market access that is the issue. The issue really lies with the supply side. And, immediately, what you realize is that there isn’t the capacity to scale up in that kind of way,” Liser said.
She said Africa’s productive capacity in terms of value added or processed product is still relatively low, with the exception of South Africa.
Liser said, in addition to market access, the U.S. was also working on trade-capacity building support.
‘We have helped the Africans to basically put in place the kind of reform measures that will make it easier for businesses to do what they do, to remove some of the constraints in terms of the business environment on that end, to reduce the cost of production which has to do with, in some cases, the cost of production which has to do with, in some cases the high cost of transportation and energy on that end,” Liser said.
A number of African countries have been turning recently toward China for their infrastructure development.
Liser said the United States is not in competition with China with regards to trade in Africa. But, she said the U.S. had some concerns with regards to China-Africa trade.
“We have some concerns because some of the patterns that we have seen in terms of China-Africa trade are that you have raw materials that China needs that are coming out of Africa in very large volume and then Africa is purchasing a lot of the finished products from China. What we are, I think, focused on is whether or not Africans are in a position, at this point, so that they can benefit the most out of this, where more jobs are created on the continent, where more of their product is processed right there on the continent,” Liser said.
Thirty-eight Sub-Saharan African countries are currently eligible for AGOA.
One of the criticisms of the program has been its eligibility criteria, including progress toward implementing economic reforms, establishing the rule of law, reducing poverty, and strengthening labor and human rights.
Liser said countries are asked to make continual progress. But, if a country has had a coup d’etat, it will not be able to meet the rule of law and governance requirement.