The U.S lawmakers and trade policy officials have started debating the renewal of the African Growth and Opportunity Act ( AGOA) which is due to expire in 2015. The AGOA is a unilateral system of
trade preferences that allows United States to import over 6500 different types of goods produced in
Sub-Saharan Africa on duty-free quota free basis. The AGOA was originally designed for eight years; from 2000-2008 but was later extended to 2015.
A group of U.S. lawmakers and trade
policy officials are examining the efficacy of AGOA in increasing investment, trade and job growth between African
countries and the United States. Among the group lawmakers and trade
policy officials are; bipartisan legislators-House Foreign
Affairs Committee, the Senate Foreign Relations Committee, the House
Ways and Means Committee and the Senate Finance Committee.
Along the same lines, the U.S. Trade Representative Michael Froman has asked the U.S. International Trade Commission (US ITC) to conduct four
studies related to AGOA to inform the policy debates on the renewal of the AGOA. The studies are examining the performance of the AGOA since its launch in 2000. Consistent with his views expressed at the 12th AGOA Forum held in Ethiopia, the USTR is specifically interested in the; impact of AGOA on the business and investment
climate in sub-Saharan Africa, possible
changes to the AGOA Rules of Origin to promote regional integration as
well as the likely impact of the EU-Sub Saharan Africa Free Trade Agreement on U.S.
exports to Africa. A
public hearing is scheduled for 14th January 2014 at the US ITC in Washington, D.C. Interested parties are expected to submit comments by January 21, 2014.
Meanwhile during the 12th AGOA Forum in Ethiopia, August 2013, the African Group called for extension of AGOA for not less than ten years. However history shows that the U.S has not operated the AGOA for a period of more than 8 years. Thus, extension of AGOA for more than 10 years seems to be far fetched.They also called for the revision of the AGOA rules of origin to reflect the development and capacity perspectives in Africa. The African group also called for extending the the third country fabric to run for the same period of the AGOA. But U.S is aware that that simpified rules of origin and a continued 3rd country fabric arrangement could provide an opportunity for the more advanced Asian economies to route their products to United States through Africa under the auspices of AGOA.
At the same 12th AGOA Forum, the USTR urged the parties to reflect on the benefits of a reciprocal relationship in form of a free trade agreement like the Economic Partnership Agreement between
Sub Saharan Africa and the European Union or the form of a trading arrangement Africa is pursuing with China. The dynamic global forces seem to indicate that world economic powers are shifting their strategy of engagement with Africa. The gift or donor strategy is being refocused and increasingly, reciprocity is being seen as the way forward. Reading between the lines, the extension of AGOA seems to be in balance.
In a nutshell, although the U.S is not expected to drop a formal trading arrangement with Sub Saharan Africa, it remains to be seen, what the Super Power will decide come 2015. The less likely outcome is the extension of the AGOA in its current form. It is also not likely that the AGOA objectives will be dropped. But Africa should prepare for some surprises, the most likely outcome may be an an extension of AGOA characterized by a movement towards a more predictable arrangement and not necessary devoid of reciprocal pressures. The interest of the U.S. lawmakers and trade
policy officials seem to say it all. They seem to be positioning to answer the question; what strategy can the U.S use to remain with a competitive space for trade and investment with or in Africa under the new global dynamics?
