AGOA: A brief background

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The African Growth and Opportunity Act (AGOA) is a legislation that was signed into law by the U.S. Congress in May 2000. The Act is designed to offer “tangible incentives for African countries to continue their efforts to open their economies and build free markets.”[1] This essentially means that virtually all-marketable goods produced in AGOA-eligible countries, which enter the U.S. market can do duty-free. Indeed, in 2013 alone, U.S. good imports from sub-Saharan Africa under AGOA tripled the amount imported in 2001, the first full year of AGOA trade.

The graph below demonstrates this point, while providing an overview of trade between AGOA countries and the U.S. over a thirteen year period (source: AGOA.info).While there may be a notable difference in trade balance, it is clear that both the U.S. and AGOA countries are benefiting from AGOA.
It is also interesting to note that petroleum products accounted for the largest portion of AGOA imports throughout the thirteen-year period, with non-oil AGOA trade amounting to around $4.9 billion in 2013, almost four times the amount in 2001.[2] Non-oil AGOA trade may refer to market products such as textiles, apparel goods, horticultural products, automotive and steel, etc.

Be that as it may, The U.S. has in practice, employed AGOA as a veritable foreign policy instrument, via selective deployment of the President’s power to determine on an annual basis, which sub-Saharan African Countries are eligible for the AGOA trade preferences. African nations that wish to benefit from AGOA must satisfy a number of factors related to prospective AGOA country’s economy; rule of law; elimination of barriers to U.S. trade and investment; poverty reduction efforts; protection of worker rights; does not engage in gross violations of internationally recognised human rights; and interference with U.S. national security and foreign policy efforts.[3]
On the one hand this may seem neo-colonial – yet another Western state imposing their agenda onto developing nations, however it is important to note that through this eligibility criteria, AGOA does in fact act as a mechanism for compelling progressive principles upon African lawmakers. Although, at this point it is necessary to mention that despite the United State’s supposed commitment to the aforementioned eligibility principles, specifically human and worker rights, LGBTI rights in most of Sub-Saharan Africa remain almost unrecognised, with LGBTI rights violations frequently occurring and going unpunished by the relevant authorities within the region. Indeed, by not using AGOA as a mechanism to ensure sexual minority rights in particular, the United States is missing an opportunity to promote equality for all.
Nevertheless, AGOA beneficiary status has been awarded to approximately 40 countries, although this number changes from time to time – sometimes on a yearly basis. For instance, Obama very recently reinstated Madagascar’s eligibility for AGOA benefits following its removal in 2009 due to the coup d’état in that region. The decision to reinstate Madagascar’s AGOA eligibility recognises the nation’s return to democratic rule, as well as President Rajaonarimampianina’s commitment to promote transparency, combat corruption, and begin rebuilding Madagascar’s economy. Swaziland has recently been removed following a conclusion made by the United States government that asserted that Swaziland had not demonstrated progress on the protection of internationally recognised worker rights, in particular the right to protect freedom of association and the right to organise.
With the above considerations in mind, it is certainly the case that generally speaking, AGOA is of mutual benefit to the United States and the eligible African nations concerned. Many countries have made strong use of this program and have increased employment in economic sectors that benefited from duty-free treatment under AGOA. For example, the government of Lesotho, one of the major apparel exporters under AGOA, estimates that employment in manufacturing rose from 19,000 in 1999 to 45,700 in June 2011.[4] Furthermore, while it may be said that the United States could go further in their criteria for eligibility, it is the case that AGOA is being used as a mechanism to promote a certain degree of development in the form of poverty reduction, the elimination of government corruption, protection of worker rights, etc. Although, there is of course, always room for improvement and adaptation.
With AGOA due to expire in September, 2015; and with formal negotiations between the U.S. and sub-Saharan African nations underway, this is certainly the time for AGOA to be at the forefront of discussions and debate concerning development in sub-Saharan Africa.

Written by Callum Hunter, NIAS

[1] Department of Commerce, United States of America
[2] Office of the United States Trade Representative, Executive Office of the President
[3] For a more detailed examination of eligibility criteria, please see: Williams, Brook R. African Growth and Opportunity Act: Background and Reauthorization, at: http://fas.org/sgp/crs/row/R43173.pdf (May 27, 2014)
[4] Central Bank of Lesotho, Africa Growth and Opportunities Act (AGOA): Economic Impact and Future Prospects, CBL Economic Review No. 131, June 2011, p. 3.

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