AGOA: One Year After Renewal

[caption id="attachment_11001" align="aligncenter" width="600"] Garment workers at a factory in Ghana. The Third-Country Fabric Provision in AGOA has boosted African apparel makers. Photo by U.S. Embassy Ghana, via Flickr. Creative Commons.[/caption]

It has been one year since the African Growth and Opportunity Act (AGOA) was renewed by the U.S. Congress and signed into law by the Honorable President Barack Obama. The extension of AGOA through September 2025 provides certainty and predictability to the U.S.-Africa economic relationship and conveys a strong signal of confidence to the U.S. business community and African partners.

The ten-year landmark extension illustrates the importance of the U.S.-Africa relationship to the United States and its strong commitment to further reinforce its economic engagement with African partners. In addition to the steady and broad bipartisan support of both houses of Congress for AGOA's renewal, representatives of the private sector, civil society organizations, and the African diaspora all worked together, in coordination with AGOA-eligible countries and the African Union Commission, to ensure a long-term extension of AGOA.

Since its enactment in 2000, AGOA has demonstrated how a trade preference program can promote poverty reduction and the sustainable economic development of Africa. AGOA has spurred the creation of tens of thousands of jobs, especially for women and youth, and motivated the development and expansion of new export sectors across the continent. Apparel, leather goods, footwear, and vehicles are all examples of export sectors that are now prominent industries on the continent thanks to AGOA's benefits.

Looking Ahead: Promoting Trade Capacity

Following the renewal of the legislation through September 2025, it is of the utmost importance to look ahead at how the next and likely final decade of AGOA trade preferences can be effectively used to promote and support sustainable economic development on the continent. One of the main challenges today is how to use AGOA as an engine of intra-regional integration, and as an instrument for Africa to leap ahead in terms of skills development, technological advancement, and job creation. The Chairperson of the African Union Commission, H.E. Dr. Nkosazana Dlamini Zuma reiterated the commitment of the African Union Commission to working with all stakeholders to ensure that the potential of the new AGOA legislation  to promote growth, development, increased industrialization, and the further integration of Africa into regional and global value chains is met.

To achieve those commendable objectives, it will be important to ensure that the remaining years of AGOA are optimized for enhanced utilization of benefits, particularly through further developing the trade capacity of AGOA-eligible countries.. Currently, many African countries need to expeditiously address the gaps in human, institutional, or infrastructural capacity — soft and hard — required to engage as more competitive partners in the global trade arena. Trade capacity building is a catalyst for structural economic reform and good governance. It also provides the necessary incentives and resources to beneficiary countries to eliminate barriers to trade and investment and engage in trade facilitation reforms. It is thus essential for African countries to be able to effectively take advantage of the benefits of AGOA and to better trade with the United States and the world. Now that Africa is one year into the (likely final) decade of AGOA, it is critical for African countries, regional organizations, and the U.S. government to put trade capacity-building at the center of all AGOA-related efforts.

This can be done in a number of ways: For African countries, developing and implementing AGOA national response strategies will be of great importance in developing new sectors and competitive and sustainable industries over the remaining nine years. This will set the path for countries to not only export under AGOA, but also become more competitive for when AGOA preferences conclude. Regional institutions and organizations like the African Development Bank and United Nations Economic Commission for Africa, in coordination with the African Union Commission, play a key role in identifying and addressing the challenges and urgent needs of AGOA-eligible countries. These institutions are also working on the various opportunities to leverage AGOA to foster regional cooperation and integration through trade and industrialization. The African Union's Continental Free Trade Area negotiations, which were launched in June 2015 in Johannesburg, South Africa, provide an excellent platform to use and coordinate trade capacity building at the national, sub-regional, and continental levels, as well as to leverage AGOA to enhance intra-African trade.

The United States, as one of the leading providers of trade capacity assistance in the world through multiple U.S. government entities, is fully cognizant of the importance of delivering trade capacity in a more strategic manner. The Global Gateways Trade Capacity Act that is under examination in the U.S. Senate underlines the United States' commitment.1 AGOA is an important vehicle through which the United States can contribute to the promotion of intra-African trade and increase Africa's global competitiveness. A robust trade capacity building program is a prerequisite to enhancing African utilization of AGOA and moving Africa's trade partnership with the United States to the next level. Ensuring a clear, coordinated, and integrated approach to trade capacity building assistance for Africa is a shared strategic interest. This will be critical for countries to take advantage of the legislation and also prepare for the post-AGOA era.

Tarek Ben Youssef is the Chargé d'Affaires a.i. of the African Union Mission to the United States.

1 The June 23, 2016 event organized by the Co-Chairs of the Congressional Black Caucus Africa Task Force, Representatives Karen Bass and Gregory Meeks, titled "AGOA's Reauthorization Anniversary: Refocusing on Capacity Building," further demonstrates the interest from the U.S. side in focusing on capacity building. It has undeniably contributed to elevating the debate on the strategic importance of this issue in an enhanced U.S.-Africa trade relationship.