Biden ‘wants to make Agoa even better’
● President Joe Biden’s administration wants to work with Congress to improve the US’s flagship trade programme with Africa, not just renew it without changes, US secretary of state Antony Blinken said on Friday.
First launched in 2000, the African Growth & Opportunity Act (Agoa) grants exports from qualifying African countries duty-free access to the US — the world’s largest consumer market. It is due to expire in September 2025, and discussions are now under way over what would be its third reauthorisation.
For South Africa, Agoa provides preferential access for about 20% of its exports to the US, or 2% of its shipment exports globally. Major sectoral beneficiaries in 2021 included vehicles, iron and steel, edible fruit, organic chemicals and precious stones.
African countries are pushing for an early 10-year extension without changes to reassure businesses and investors. Despite longstanding bipartisan support from US lawmakers, who view Agoa as critical in countering the influence of China in Africa, there are divisions over the need for updates. A recent push in the US Senate is aiming to pass a quick Agoa renewal.
Biden has also said he fully supports the initiative’s reauthorisation. “But we don’t just want to extend Agoa, we want to work with the US Congress to make it even better,” Blinken said in a video message to US officials and African trade ministers meeting in Johannesburg to discuss Agoa’s future.
African exports worth more than $10bn (R183bn) entered the US duty-free last year under the programme. However, the US International Trade Commission has highlighted major shortcomings. More than 80% of duty-free non-petroleum Agoa exports, for example, have come from just five countries — South Africa, Kenya, Lesotho, Madagascar and Ethiopia — in recent years.
“We see that there is opportunity to shape a stronger, new, forward-looking vision for US-Africa trade,” US trade representative Katherine Tai, who is leading the US delegation, told the African ministers.
However, African governments and US industry associations worry that attempts to radically alter Agoa risk bogging the programme’s renewal down in a Congress that is already struggling to pass even the most critical legislation.
President Cyril Ramaphosa called for a lengthier extension when addressing the Agoa gathering on Friday. “We would like you to look at an extension of Agoa for a sufficiently lengthy period, to act as an incentive for investors to build factories on the African continent. We believe there is great value in retaining all beneficiary countries to build on the emerging regional value chains making a significant contribution to the industrialisation of the … continent.”
Speaking to the media afterwards, Ramaphosa added: “Many businesses would like to have forward planning, and many of them have five-year plans, so it’s not inconceivable that we should think about an Agoa that could be extended for much longer, rather than be reviewed every year.”
He said businesses would then be able to make long-term investment plans.
“They can build factories with confidence that they will have offtake agreements, because if you know you have a market your offtake agreement becomes a lot easier, [so you can] build more capacity, factories and more products.”
Meanwhile, BusinessLIVE reported that African trade ministers, including Ebrahim Patel, were pushing for the annual eligibility reviews of Agoa to be conducted every three years instead of annually, to allow for predictability and certainty for investors.
This is after four beneficiary countries — Uganda, Niger, the Central African Republic and Gabon — were kicked out of the trade programme on the eve of the forum’s annual meeting partially because of human rights issues.
African trade ministers meeting on Thursday also vowed to push for the US to reconsider the exclusion of the four countries because it “disrupts the emerging regional value chains and thus reduces the contribution of Agoa to the structural transformation of the continent”, a discussion document they compiled reads.
Harriet Ntabazi, trade minister of Uganda, whose country was suspended over “gross violations” of internationally recognised human rights, said such issues should be separated from trade.
Ugandan officials have linked their exclusion to an anti-homosexuality law that was passed by its parliament in May.