South Africa will host the annual African Growth and Opportunity Act (Agoa) Forum in Johannesburg from Thursday until Saturday to discuss the United States’ flagship trade programme for the continent.
Here are some key facts about Agoa:
What is Agoa?
Agoa is a US trade initiative passed in 2000 under former President Bill Clinton to deepen trade ties with Sub-Saharan Africa and help African countries develop their economies.
Read: The big Agoa debate
Agoa provides duty-free access to the US market for most agricultural and manufactured products exported by eligible African countries.
It has been renewed twice and is due to expire in September 2025.
About 35 African countries are eligible. Countries can lose and regain eligibility based on criteria including economic policies and protection of human rights.
Read: US cuts off Ethiopia, Mali, Guinea from Africa duty-free trade programme
A number of countries, including Ghana, Kenya, Lesotho, Madagascar, and Ethiopia, have successfully used Agoa to boost exports to the US and create jobs, especially in textiles.
One study estimated that 350 000 direct jobs were created due to Agoa from 2001 to 2011.
The US benefits by furthering its interests on the continent. Countries that undermine US national security or foreign policy interests are not eligible for Agoa.
US lawmakers view it as an important soft power tool, particularly as a counter to Chinese influence.
What do critics say?
Many analysts have pointed out that Agoa is under-utilised.
Only about half the eligible countries have developed national Agoa utilisation strategies, and the majority of exports come from just a few.
A US government study found that more than 80% of non-petroleum exports under Agoa came from just five countries in 2021. And while the apparel sector has been the programme’s biggest success story, other industries have lagged.
Read: Kenya and the US are negotiating a trade deal that could be a model for Africa
Some critics say that Agoa has failed to live up to expectations. US imports from Agoa beneficiaries peaked in 2008 and in 2021 accounted for only 1% of all US imports.
Some analysts say that Agoa has had a positive impact but that it needs to be updated and improved to include newer industries such as technology and digital services.
One of the main topics likely to be in focus at the forum is whether to extend Agoa.
Experts say that the US could renew Agoa in its current form, let it expire, or attempt to rethink and reform it.
African countries are pushing for an early 10-year extension without changes in order to reassure businesses and investors who might have concerns over Agoa’s future.
SA asks US for early renewal of Agoa
SA lobbies to retain preferential access to US markets
A group of US senators has also backed a quick and lengthy renewal, but the office of the US Trade Representative is calling for changes to make Agoa more effective.
Listen to this Moneyweb@Midday podcast as Jeremy Maggs chats with Donald MacKay on how SA will manage a diplomatic minefield (or read the transcript here):
You can also listen to this podcast on iono.fm here.
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