The African Growth and Opportunity Act (AGOA) provides eligible 40 sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products, in addition to the more than 5,000 products that are eligible for duty-free access under the Generalized System of Preferences (GSP) program. There are entry rules to become a part of AGOA. Countries should make continual progress toward establishing a market-based economy, the rule of law, political pluralism, and the right to due process. Besides, eliminating barriers to U.S. trade and investment, countries should enact policies to reduce poverty, combat corruption and protect human rights.
Admittedly, during the Trump Administration, many thought that AGOA was under threat due to his scant respect for multilateralism and preference for entering into bilateral agreement for free trade. Following the US-Morocco free trade agreement entered into force in 2006, the US and Kenya have been pitching for a free trade agreement, which could not be concluded so far.
AGOA is entering into its 21st year since inception. It augurs well that a proper analysis is done to assess its relevance and how it has been helping both regions in furthering their business interests and of course, strengthening the democratic institutions and market driven economies.
The first realization that should be taken precedence is that Africa in the dawn of the millennia, when AGOA was launched, was different from the present one. Countries like Nigeria, South Africa, Kenya, Tanzania, Ethiopia etc have shown remarkable progress in their growth history on the back of oil wealth, improved manufacturing and services facilities, strong service sector etc. That has made the US a major stakeholder in the new Africa, like others such as China, Russia, EU, Japan and India.
Although the tenets of the AGOA and the accompanying duty free access to the US market is still relevant, there is no denial that the US has been a beneficiary now in augmenting exports and channelizing investments. Conceding that still the African countries have to go a long way in meeting the developmental aspirations, it is instructive to give a new definition and meaning to AGOA as a platform for mutual development and not another negotiating tool for serving US business interests. That calls for a new approach and bandwidth, which many feel the present Joe Biden dispensation has to girth and mind to provide.
The so-called bilateralism which the Trump administration proposed to follow by entering free trade agreements with individual countries in the region should be tempered with the launch of AfCATA, the largest trading bloc in the world. That also would help particularly the smaller and poorer countries like Zimbabwe, Burundi, Central African Republic, DRC, Libya, Mali, Somalia etc, which have invited US sanctions for one reason or the other inflicting untold miseries to the citizens. The reasons for imposing sanctions on these countries are mostly non economic. It will be befitting that such jurisdictional authority is vested with African Union, which is presently getting actively involved in the conduct of free and fair elections, human right violations, ensuring freedom of expression, sorting out intra-country rivalries etc.
Twenty years is the right time to take stock of the operation of AGOA to fine tune its operations and to make forays into areas that it shied away. Africa now needs a strong manufacturing sector, a buoyant agricultural and agribusiness sector and a booming services segment with more focus on ICT and tourism segments. Import of second hand goods and clothing may not be that high in the pecking order now, when a number of countries like Ethiopia, South Africa, Mauritius, Madagascar, Egypt etc have come forward in investing in textiles and related sectors for the entire continent. Also, promotion of hand holding of small businesses in both regions is not only a felt need and value adding proposition but also a route for realizing mutual advantage. Yes, Africa is awaiting strong signals from the Biden Administration in catalyzing and embellishing AGOA.
