A meeting to discuss the African Growth & Opportunity Act (AGOA) last week concluded without any real resolution, though the consensus seems to be the trade preference program is underutilized.
AGOA, which gives 41 sub-Saharan African countries duty free access to the U.S., is due to run through 2025, following a 2015 renewal of the law. But the Trump Administration, which is undertaking a comprehensive review of all trade agreements and preference programs, may have other ideas.
Questions about the future of the program surfaced this summer when Commerce Secretary Wilbur Ross said in a speech at the U.S.-Africa Business Summit in Washington, D.C. that the U.S. needed to move from an “AID-based” relationship with Africa to a “TRADE-based” relationship in which programs like AGOA would give way to bilateral trade agreements.
[Read more about the status of AGOA: Is the US Looking to End AGOA?]
He said Africa is on the path to self reliance and that bilateral trade agreements would do more for the countries there—and the U.S.—than temporary trade preference programs. Trade agreements between the U.S. and each of these countries individually would also dovetail with President Trump’s own preference for bilateral deals.
Twenty-six nations are eligible for duty free access to the U.S. on all clothing and some textile exports. Through 2025, exports out of Africa under AGOA could quadruple, which would mean as much as $480 million in duty savings for the U.S. market, but AGOA, along with other preference programs like Qualifying Industrial Zones (QIZ) with Egypt and Israel and the HOPE/HELP Acts in Haiti are underused, currently only represent $3 billion of textile and apparel imports.
[Read more about preference programs in the Trump era: Preference Programs Turn Prime Picks for Duty Free Trade]
Businessman Sylvain Adewoussi of the African nation Benin told the publication, “AGOA is an excellent opportunity but we aren’t making the most of it, mainly due to a lack of knowledge about it.”
U.S. Trade Representative Robert Lighthizer was among the U.S. officials who met in Togo with representatives from African nations last week. Reuters reports that during the two-day meeting, the countries involved agreed to develop a plan to make better use of the program, start bilateral trade talks with the U.S. and develop a way to protect producers from price fluctuations.
“Not all the countries eligible have benefited from the law,” said Bernadette Legzim-Balouki, Togo’s trade minister. “We are trying to examine the constraints that prevent some African countries from profiting.”
Meanwhile, the USTR has already begun a review of the status of Tanzania, Uganda and Rwanda under AGOA, the results of which could withdraw, suspend or limit the countries’ tariff and duty-free benefits. The out of cycle review was triggered by a petition filed by the U.S. Secondary Materials and Recycled Textiles Association (SMART) over the East African Community’s (EAC) decision to ban imports of secondhand clothing. SMART said the ban violates AGOA, which calls for the countries to eliminate barriers to U.S. trade.