U.S.-Africa trade program must be more than ‘symbolic,’ U.S. trade chief says

Delegates attend the opening of the U.S.-sub-Saharan Africa trade forum to discuss the future of the African Growth and Opportunity Act (AGOA), at the NASREC conference center in Johannesburg, South Africa, November 3, 2023. REUTERS/Siphiwe Sibeko Acquire Licensing Rights

JOHANNESBURG, Nov 4 (Reuters) – The United States is looking for a “more useful and effective” trade programme with Africa, U.S. Trade Representative Katherine Tai said on Saturday, as talks are underway to update a two decade-old duty free initiative.

The African Growth and Opportunity Act (AGOA), which grants exports from qualifying countries duty-free access to the U.S. market, is due to expire in September 2025, with talks focused on renewal and possible reform.

AGOA was reauthorised twice before — in 2004 and 2015 — and Tai is in Johannesburg, South Africa, wrapping up three days of talks with African trade ministers over the programme’s future and a possible third reauthorisation.

“We would like to see this programme be more than just a symbolic one. We would like for it to be more useful and effective,” Tai told journalists.

Over $10 billion worth of African exports entered the United States duty free last year under the programme. However, in many areas AGOA, which was launched in 2000, has failed to live up to its promise.

Despite longstanding bipartisan support from U.S. lawmakers, who view AGOA as critical to countering the influence of China in Africa, there are divisions in Washington over the need for updates.

African countries, concerned that too many changes could bog renewal down in Congress, are pushing for an early 10-year extension. They say improvements can be made once the programme is reauthorised.

But the Biden administration wants changes as part of a renewal.

“I don’t quite know how you would enhance it without doing it in the statute,” Tai said.

A revised AGOA should aim to improve the programme’s utilisation by qualifying countries and take into account the recent creation of the African Continental Free Trade Area, Tai said.

It should also ensure countries maintain benefits even as they grow wealthier and include more small business participation.

UNPAUSING INVESTMENT

U.S. business associations say there must be certainty over AGOA if Africa is to take advantage of a current global push by companies to reduce their dependence upon Chinese manufacturing.

“American businesses want AGOA reauthorised. Regardless of sector, they’ve made that very clear,” British Robinson, who heads the U.S. administration’s Prosper Africa trade an business initiative, told Reuters.

With renewal still up in the air, businesses are already hitting the pause button on new investments, South African Trade Minister Ebrahim Patel said.

“An early reauthorisation will unpause those buttons,” he said.

A recent push in the U.S. Congress supports the idea of a quick AGOA renewal.

U.S. House of Representatives Foreign Affairs Committee Ranking Member Gregory W. Meeks, a New York Democrat, and Chairman Michael McCaul, a Texas Republican, on Friday said they agreed AGOA could be improved.

“But we believe the principal consideration must be ensuring a successful and timely reauthorisation,” they said in a statement.

Political gridlock, however, has complicated efforts to pass even the most critical legislation in recent months, raising fears AGOA could struggle to make it onto the Congressional agenda.

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