Signed into law by President Clinton on May 18, 2000 and subsequently expanded, the African Growth and Opportunity Act ( AGOA) is a unilateral system of trade preferences that allows thousands of types of goods produced in Sub-Saharan Africa to be imported duty-free to the United States.
AGOA is widely perceived to be a success, albeit a limited one. From 2001 to 2011, the aggregate amount of exports from Africa to the United States under AGOA increased from $8 billion to $54 billion; the number of countries participating grew from 34 to 40; and the number of countries exporting non-energy products increased from 13 to 22. American officials describe AGOA as the “cornerstone” of U.S. trade policy with Africa.
Because AGOA is set to expire in 2015, U.S. lawmakers and trade policy officials have launched investigations into AGOA’s efficacy. In particular, a group of bipartisan legislators from the House Foreign Affairs Committee, the Senate Foreign Relations Committee, the House Ways and Means Committee and the Senate Finance Committee sent a letter to the U.S. Comptroller General requesting that the General Accountability Office examine the effectiveness of AGOA in an effort to better increase investment, trade and job growth between African countries and the United States. House Foreign Affairs Committee press release click here.
In addition, the U.S. International Trade Commission (US ITC) had been asked by the U.S. Trade Representative Michael Froman to conduct four studies related to AGOA to aid negotiators in AGOA renewal discussions. Specifically, the US ITC is looking into the performance of AGOA since its adoption in 2000, and has requested comments in four investigations on issues such as “the impact of AGOA on the business and investment climate in sub-Saharan Africa.” The US ITC is also looking at possible changes to the AGOA Rules of Origin to promote regional integration as well as the impact of the EU-South Africa Free Trade Agreement on U.S. exports to Africa. Press release regarding the US ITC investigations click here. A public hearing will take place at the US ITC in Washington, D.C. on January 14, 2014, and comments may be submitted by January 21, 2014.
While there is widespread bipartisan support for AGOA, its shape going forward remains to be seen. Will it be extended for ten years or more, as some African nations urge? Or will it even continue in its current form as a unilateral preference agreement? Or will AGOA be replaced by a free trade agreement like the Economic Partnership Agreement between South Africa and the European Union? Commentary has already been made about African countries that enjoy AGOA benefits opening their markets to U.S. exports.
If trade with and/ or investment in African countries is part of your company’s business strategy, now is the time to get involved.