AGOA Extension Requires Another Waiver by the World Trade Organisation
The African Growth and Opportunity Act (AGOA) will expire in September 2015. AGOA extension requires another World Trade Organisation (WTO) waiver because it is inconsistent with the Most Favoured Nation obligation. Programs such as the Generalized System of Preferences (GSP), under which developed countries grant preferential tariff rates to developing country products, such as the African Growth and Opportunity Act (AGOA) require a waiver by the World Trade Organization (WTO) .Such programs are inconsistent with the Most Favoured National obligation because they accord some countries more favourable tariff treatment to selected countries than is accorded to other WTO Members.
On 27 May 2009, a WTO waiver was granted to the AGOA so as to permit the United States Government to provide duty-free treatment to eligible products of certain sub-Saharan African countries as authorized by the provisions of the AGOA without being required to extend the same duty-free treatment to like products of any other Member. This WTO waiver expires on 30 September 2015 and another one is needed for the AGOA extension after 2015.
Most African countries have been beneficiaries of the AGOA which was passed in May 2000 by the US Government. The AGOA act aims at strengthening U.S relations with African countries and provides incentives for African countries to achieve political and economic growth. The AGOA which provides market access opportunities to a significant number of products from Sub Saharan Africa to the U.S will expire on expires 30 September 2015. The Act enables about 6500 items of commodities imported from sub-Saharan African countries to enter the US market on a quota and duty free arrangement. Some of the products in the list include coffee, tea, live goats and chicken, diary products, cotton/textiles, fisheries, vanilla, floriculture, natural honey, tobacco leaf and tobacco partly or wholly stemmed / stripped, hides and skin, minerals{copper, oil, gold, zinc etc], crafts and many others.
The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. This is achieved through its major fundamental principle of Most-favoured-nation (MFN): treating other people equally. Under the WTO agreements, a country cannot discriminate between member countries. Grant someone a special favour (such as a lower customs duty rate for one of their products) but you have to do the same for all other WTO members.
In general, MFN means that every time a country lowers a trade barrier or opens up a market to another country, it has to do the same to all WTO Members. However there are exceptions to this MFN Principle as indicated below:
WTO Members can grant preferential market access schemes on Quota Free and Duty Free (DQF) arrangement to Least Developed Countries like Uganda or on a Generalized System of Preferences (GSP) to all Developing Countries under the WTO provisions of Special and Differential Treatment.
Developed Country Members wishing to extend preferential market access to a group of developing or least developed countries must seek for a WTO waiver which comes with fixed and termination dates. Another WTO waiver is required if the AGOA extension is achieved.
Preferential Schemes like the African Growth Opportunity Act (AGOA) by the US and the former Cotonou Agreement fall under this category. WTO waiver for the AGOA was granted and there are now proposals to extend the arrangement beyond 2015 when the waiver is supposed to expire. Very many LDCs like Siri Lanka and Cambodia might oppose the move unless they are included in a similar scheme.
The US is currently involved in negotiations for a number of bilateral Free Trade Agreements countries such as Korea, Colombia Panama and Bangladesh, among others. A number of these countries especially the Asian and Pacific countries represent more than half of the global output and about 40% of global trade. These countries are competing in the US Market without an AGOA like arrangement. A quota free, duty free arrangement similar to the AGOA extended to these countries by the US could result in less competitive countries losing their preferential advantage they are enjoying under the AGOA.
It should be noted that African should support AGOA extension given its benefits to their economies. However, this will require another WTO waiver and some of the least developing non African countries mentioned above might attempt to block the move. AGOA being a preferential treatment based on a continent rather than a specific group of countries determined by their level of development, chances are that the WTO waiver will be attained. Block voices and allies are however required in advocating for AGOA extension and its WTO waiver.
