AU's position on the Africa-US trade programme
At a recent meeting of African trade ministers and U.S. officials in Johannesburg, Albert Muchanga, the African Union's Trade Commissioner, emphasised Africa's desire for the U.S. Congress to extend the African Growth and Opportunity Act (AGOA) for a significant period of at least 10 years.
This meeting came after the Biden administration announced its intention to end the participation of Gabon, Niger, Uganda, and the Central African Republic in AGOA due to governance and rights concerns.
The AGOA, initiated in 2000, provides duty-free access to the United States for qualifying African countries and is set to expire in September 2025.
Benefits from AGOA are available for about 5,240 tariff products. Goods must be sufficiently manufactured in an AGOA nation or entirely obtained (grown, fished, mined, etc.) to qualify for benefits under the agreement.
AfCFTA: No free access to the US
US exports to African markets are still subject to national tariffs. Some US lawmakers have previously proposed making the programme more reciprocal. Commissioner Muchanga said that US exports will not be granted duty-free access to Africa's new free trade area AfCFTA. Goods exported from the United States into Africa will be subject to national tariffs, ensuring a level playing field.
He also said that the United States would not be granted tariff-free access to AfCFTA. The AfCFTA is an AU initiative which seeks to expand Africa’s economy by $29 trillion by 2050 through the elimination of tariffs on intra-Africa trade.
AGOA renewal: Why the duration matters
The duration of AGOA's renewal holds critical importance to the investment community. Muchanga stressed that an extension of 10 to 20 years is essential to provide the stability needed for attracting investments.
"An extension of 10 to 20 years is very critical to the investment community. Anything lower than that would generate uncertainty," he is quoted by Reuters.
Debates and discussions in Washington
While there is significant support from U.S. lawmakers and the Biden administration for renewing AGOA, there is an ongoing debate in Washington regarding the necessity of updating the program to enhance its impact. Constance Hamilton, the Biden administration's top trade official for Africa, has said that the US Congress should consider changes to make the programme more impactful.
In the discussion draft of the AGOA renewal ACT 2023 released on Monday, US Senator Chris Coon, proposes that the eligibility of South Africa be reviewed and the extension of AGOA by 16 years, “pushing back the programme’s expiration from 2025 to 2041.”
Modifications after extension
African governments and some U.S. industry groups are concerned that making modifications to AGOA as part of the renewal process could lead to delays in its reauthorisation. Commissioner Muchanga said that any enhancements to the programme should be considered after the extension is secured.
In a discussion document between African trade ministers and the US, the ministers pushed for the extension to include Northern African states and AU member states that have signed and consented to the AfCFTA, South African news website Business Day reported.
