ISS TODAY OP-ED
To expel or not to expel — all agree Agoa should be renewed. But how?
The question is how to expand Africa’s economic growth without endorsing undemocratic behaviour.
At the 20th African Growth and Opportunity Act (Agoa) annual forum in Johannesburg last week, the US government and Congress, African trade ministers and business representatives, organised labour and civil society agreed it should be reauthorised before expiring in 2025.
When Agoa was last renewed in 2015, it seemed that might be the last renewal, and that this concession should be replaced by a conventional reciprocal free trade agreement (FTA) or several FTAs. Agoa gives eligible sub-Saharan African countries duty-free access to the US market for most products without having to reciprocate. A decade later, no such FTAs are in prospect, not least because the US has gone off free trade.
So, faced with the alternative of no preferential access for Africa after 2025, both sides of the Atlantic seem committed to extending Agoa. The only questions are the period of renewal, and how to ensure more African countries can benefit.
Constance Hamilton, the assistant US trade representative for Africa, said before the forum that Agoa “has not met the expectations we had in 2000”, when it was founded. Though some countries had benefited, Agoa hadn’t been a “game changer for the continent” in boosting its overall economy and regional integration.
So, the forum discussed ways to bring in more countries – after the number was reduced from 35 to 31. Niger and Gabon will be ejected from 1 January 2024 because of coups, and Uganda and the Central African Republic for undemocratic behaviour.
However, the priority is renewal. Participating African countries’ trade ministers called for an extension of at least 10 years, and retention of all current beneficiary countries to preserve value chains and support Africa’s industrialisation efforts.
Lande proposes giving the US administration more discretion in deciding which countries should be removed, instead of being forced to remove those that fall foul of the bill’s conditionalities.
The forum heard that apart from the benefits to Africa, Agoa also supported 155,000 US jobs. The US also backed the programme’s renewal through statements or video messages by President Joe Biden, Secretary of State Antony Blinken and several congressional leaders of both parties. That bipartisan support is vital as reauthorisation would happen in Congress.
And just after the forum closed, Democratic Party senator Chris Coons – an influential friend of Africa on the foreign relations committee – released a draft bill to renew Agoa until 2041. “This long-term extension would provide businesses with the predictability needed to invest in sub-Saharan Africa at a time when many firms are looking to diversify their supply chains and reduce dependence on China,” Coons said.
His bill proposed several changes to expand Agoa’s use, reflecting many issues discussed at the forum. For instance, to extend the programme and integrate it with the African Continental Free Trade Area (AfCFTA), Coons’s bill would modify Agoa’s rules of origin to allow inputs from north African AfCFTA members.
His bill would also keep more countries in Agoa by only “graduating” them out when they have maintained high-income status for five consecutive years. This would avoid removing some countries and letting them back in if their economies fluctuated around the high-income threshold – as Mauritius recently did. The draft bill also proposes that the current annual eligibility reviews of all 49 sub-Saharan African states happen only every three years.
However, Coons’s bill has a sharp sting in the tail. It intends to eject South Africa from Agoa by calling for an immediate “out-of-cycle” review of the country’s eligibility. The move reflects resentment on both sides of the aisle in Congress about Pretoria’s warm relations with Russia, Hamas and its sponsor Iran.
Lande’s proposals
Stephen Lande, president of international business advisers Manchester Trade, supported the bill – but as the first step to renew and then enhance Agoa. He told ISS Today that South Africa’s Trade, Industry and Competition Minister Ebrahim Patel made the same proposal at the end of the forum. Prompt renewal would avoid a decline in orders in Agoa’s most successful sector (garments assembled from Far East fabrics), since it takes about two years to complete an order.
But Lande said the changes in Coons’s bill wouldn’t correct some of Agoa’s major challenges. He proposes giving the US administration more discretion in deciding which countries should be removed, instead of being forced to remove those that fall foul of the bill’s conditionalities. At present, more than 10 of the 49 countries are not eligible for Agoa benefits.
“The administration should be able to weigh the advantages of removing a country versus the collateral damage. For instance, allowing a dictator to scapegoat the US for his own failings, or letting China in, or harming the very groups Agoa is designed to assist (women in the sewing trade who have been harmed by Agoa suspensions in Madagascar and Ethiopia), or disrupting supply chains.”
Lande said he would also ease the rules of origin, which now require 35% value added in the Agoa member country for the product to qualify. He noted that with components becoming more expensive relative to labour, the 35% threshold was unrealistic. Lande said he would allow duty-free imports of processed cocoa products that currently incur punitive tariffs as they contain dairy products and sugar.
He would designate all AfCFTA members as members of Agoa if they were otherwise eligible – and not just include them for cumulation of inputs as Coons proposes. This would embrace north African countries that aren’t currently part of Agoa.
All these proposals would deepen and extend Agoa benefits. However, Lande’s proposal to give the US administration more discretion to consider other strategic factors, such as deciding whether to expel African states for bad behaviour, would provoke difficult ethical debates.
Is it better to incentivise democracy by expelling countries for undemocratic behaviour – at the cost of greater African economic advancement and integration? Or to prioritise economic development, believing this will eventually boost democracy? A perennial imponderable. DM
Peter Fabricius, Consultant, Institute for Security Studies (ISS) Pretoria.
First published by ISS Today.
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The way the next US election is headed, my 2c to any SA business that is heavily exposed to SA being expelled from AGOA is to move core operations to one of the SADC countries that will not be expelled.
As a bonus, their ports and rail and roads and labor function better than ours, and in a few cases so do their power grids.
“Agoa gives eligible sub-Saharan African countries duty-free access to the US market for most products without having to reciprocate.”
Says it all. They forego substantial import duty revenue and we cosy up to their enemies and take every opportunity to get up their noses. Why they haven’t told us that the handouts are ending already is entirely beyond me.
Criminals like Coons do not faze us and we are not going to kow tow to a country with the worst human rights record all over the world not now and not in the past. Their support as the American Congress and administration of the murderous regime in Israel has never come to us as a surprise as this is their trade to support murderous regimes. We doubt that the clown is going to get his wish despite the media making this unimportant fellow like Lindsay Graham as a significant person. He may not even return after the elections next year and he is trying to get votes at our expense. We are going to ignore the idiot. Africa does not have a friend like Coons and AGOA is a brain child of a Republican. If we are to be listening to the US on foreign policy because of AGOA in particular on Palestine, they can take their AGOA we will still have a country the following day like countries that are not in AGOA. Americans know nothing about democracy you must ask the Chileans and the Egyptians let alone the Congolese. The American scars in Egypt, Iraq and Afghanistan are still visible and they want them out of Iraq because they are liars. A thug like Coons can do his damnest we do not care a hoot about him and people must not lie and say that he is a friend of Africa as we do not have a friend who looks like him but a fiend.
I guess you’re entitled to your opinion. However, while telling the USA to take AGOA and shove it, perhaps consult with the thousands of fruit workers in the Western Cape, many of whose jobs would be on the line without the fruit exports we enjoy to the USA. Your love of murderous Hamas operatives is not worth the lives of these honest workers. Think before you scribble trash masquerading as an option.
For me – reading Cunningham Ngcukana is like listening to Billy Connelly. There’s a 100%, no-money-back guarantee that I’m going to laugh out loud. How I wish this guy went on tour, I’d buy tickets.