Should the U.S. African Growth and Opportunity Act (AGOA) be extended?

2023 11 03T104647Z 1755011970 RC2L54A7V07G RTRMADP 3 USA AFRICA TRADE scaled
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

The U.S. African Growth and Opportunity Act (AGOA) is a trade initiative aimed at strengthening ties with Sub-Saharan African countries and supporting their economic development. Under AGOA, eligible African countries have duty-free access to the U.S. market for most agricultural and manufactured products. This initiative, passed in 2000 by former President Bill Clinton, has been renewed twice and is set to expire in September 2025.

The Arguments
AGOA not only benefits African countries but also serves U.S. interests by enhancing its engagement on the continent. However, countries that pose a threat to U.S. national security or foreign policy interests are not eligible for AGOA. American lawmakers consider AGOA an essential soft power tool, particularly as a counter to Chinese influence in Africa.

Despite its potential, AGOA has been under-utilised. Many analysts note that less than half of the eligible countries have developed national AGOA utilization strategies, and a majority of exports come from only a few countries. In fact, a U.S. government study revealed that more than 80% of non-petroleum exports under AGOA in 2021 originated from just five countries. Although the apparel sector has been a success story, other industries have lagged behind.

Critics argue that AGOA has not met expectations. U.S. imports from AGOA beneficiaries peaked in 2008 and currently account for only 1% of all U.S. imports. Some analysts believe that AGOA has had a positive impact but needs to be updated and improved to include emerging industries like technology and digital services.

The facts
Around 35 African countries are currently eligible for AGOA, but eligibility can be gained or lost based on criteria such as economic policies and human rights protection. Several countries, including Ghana, Kenya, Lesotho, Madagascar, and Ethiopia, have successfully utilized AGOA to increase exports to the U.S. and create jobs, particularly in the textiles industry. In fact, a study estimated that AGOA led to the creation of 350,000 direct jobs from 2001 to 2011.

African countries are urging for an early 10-year extension without changes to provide reassurance to businesses and investors concerned about the future of AGOA. On the other hand, the U.S. Trade Representative’s office is calling for reforms to make AGOA more effective. A group of U.S. senators has shown support for a quick and lengthy renewal of AGOA.

The U.S. African Growth and Opportunity Act (AGOA) has served as a trade initiative to foster economic development and strengthen relations between the U.S. and Sub-Saharan African countries. However, there are concerns about its underutilization and the need for updates to include newer industries. The extension of AGOA beyond 2025 is currently being debated, with African countries and U.S. officials holding differing views on the matter.

More from Qonversations

TalkingPoint

Referee VAR Robot

Will football be a better game when referees are replaced by robots?

TalkingPoint

2024 02 12T064943Z 308552884 RC2U06AOLV5G RTRMADP 3 EMIRATES SUMMIT

Is Kagame’s bid for a fourth term a true expression of democratic choice, or does it signal a drift towards authoritarianism?

TalkingPoint

Putin and Kim

North Korea and Russia forge strategic alliance: A new global order?

TalkingPoint

Taliban Afghanistan

Doha Talks: Will the Taliban’s participation change the course for Afghanistan?

Front of mind