HELEN SUZMAN FOUNDATION
HSF Brief: Perspectives and Facts on AGOA
OVERVIEW
South Africa will co-host the African Growth Opportunity Act 20th Forum with the US Department of Commerce. The 20th AGOA Forum will be held in Johannesburg, from the 1-4 of November 2023. The AGOA Forum is an annual event in which the US government meets its African counterparts who are beneficiaries of this preferential trade regime.
In this regard, South Africa together with the United States is hosting Trade Ministers and Senior Officials from thirty-five African countries who are current AGOA beneficiaries. South Africa’s hosting of the Forum comes after there had been speculation earlier in the year about the country’s suitability to be a host, not to mention its continued eligibility to benefit from AGOA.
This speculation and one dare say pressure within the US to take away hosting rights from South Africa emanated from tensions between the two countries arising from differing approaches to the Russian invasion of Ukraine. Consequentially, the AGOA discourse in South Africa assumed a political turn which overshadowed a more informed understanding of what AGOA really entails and South Africa’s interests therein.
ORIGINS OF AGOA
The African Growth Opportunity Act is a trade regime established by the United States Government in May 2000. AGOA allows for duty free and quota free importation of more than 6000 different types of products from Sub Saharan countries into the United States.
In essence, African countries could export their goods free of import duties into the United States. AGOA covers 6685 products or tariff lines into the US market. These would in most instances cover the majority of goods the beneficiary countries seek to export, much of it because the economies in question have undiversified export baskets.
As of November 2023, thirty-five (35) African countries were active AGOA beneficiaries. The following countries were not beneficiaries of AGOA as of November 2023: Burkina Faso, Burundi, Cameroon, Ethiopia, Guinea, Mali, Mauritania, Seychelles, and South Sudan.
The beneficiary status of these countries has been withdrawn by the US government for not fulfilling the non-trade conditions attached to AGOA. President Obama extended AGOA’s lifeline by ten years in 2015, meaning the current lifespan of the legislation will come to an end in 2025. In terms of size of trade, African countries exported more than US$10.6bn worth of goods to the United States market in 2022.
THE POLITICAL ECONOMY OF AGOA
While AGOA is a preferential trade regime extended to African countries by the United States, the arrangement furthers the country’s national strategic interest. AGOA is part of the US’s foreign policy instruments that the country adopts to exert its influence and externalise some of its values as these relate to democracy, foreign policy, governance, and human rights.
The power to exert that influence lies in AGOA being a unilateral preferential trade regime whose benefit can be extended or withdrawn by the US, at any time, when a country is deemed to be falling short of the trade regime’s objectives and eligibility criteria.
OBJECTIVES
Access to the US market for exports which are duty free and quota free under the AGOA framework is in principle available to all Sub-Saharan African countries. These countries are either classified as developing or least developed. However, the overarching eligibility criteria based on geographical location and development level is complemented by other requirements that are in consonance with US values and national interest.
One of the stated objectives of the AGOA is to strengthen democracy in the Sub-Saharan African region. This democratisation will be realised through having beneficiary countries encourage broader participation in political processes in a way that enhances political freedom. Another stated AGOA objective is to have African beneficiary countries acceding to the OECD’s Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions. South Africa in many respects complies with the AGOA objectives stated above including being a signatory to the OECD Convention on Foreign Bribery.
ELIGIBILITY CRITERIA
The African Growth and Opportunity Act establishes a set of criteria that must exist and be maintained in beneficiary countries to sustain coverage by the legislation. Beneficiary countries should be committed to upholding the rule of law, strengthening the private sector particularly women owned businesses, facilitation of civil societies and strengthening of political freedoms. AGOA further mandates that countries must also adhere to the protection of private property rights, minimise government interference in the market, have systems in place to combat corruption and promote labour rights.
Furthermore, Section 104(a)(1) of the AGOA stipulates a list of (mis)conduct that would prompt the United States to withdraw beneficiary status. These include that the country engages in activities that undermine the US’s national security or foreign policy interests. While South Africa does fulfil most of the criteria for AGOA due to its robust democratic and constitutional culture, it is these provisions, and specifically South Africa’s stance on the Russia-Ukraine conflict, that has engendered concern within the US as to whether it should retain its beneficiary status. AGOA also prohibits beneficiary countries from engaging in gross violations of human rights and supporting international terrorism and compels cooperation in efforts to dismantle acts of terrorism.
SOUTH AFRICA’S AGOA ELIGIBILITY
Since AGOA’s inception in 2000, various countries have had their beneficiary status revoked and reinstated. Mostly these revocations had to do with countries violating human rights and rule of law prescripts. Countries that have been subjects of AGOA withdrawals include eSwatini, the Central African Republic, Ivory Coast, Cameroon, and Burundi. Zimbabwe and Sudan have been considered as ineligible since inception of the trade framework.
Currently, the following countries have had their statuses revoked due to bad governance, and violations of human rights including coups. These are Ethiopia, Guinea, Mali and Burkina Faso. A day before the commencement of the AGOA Forum, President Biden announced AGOA beneficiary status would be withdrawn from Uganda, Gabon, Niger, and the Central African Republic. This withdrawal has according to President Biden been necessitated by ‘gross violations of humanitarian rights’.
FOREIGN POLICY CONSIDERATIONS
South Africa’s own eligibility status was at stake due to supposed infractions of the ‘foreign policy and national interest’ objectives. That South Africa could be found wanting on foreign policy matters reflects the complexity of the country as a diplomatic player among its sub-Saharan African peers.
The ongoing conflict in the Middle East frames this impending Summit. South Africa’s unequivocal support for Palestine, and specifically the call between Department of International Relations and Cooperation Minister Pandor and a Hamas representative, which the US considers a terrorist organisation, may invite some tension and calls from political actors in the US to review SA’s status. Given the multivalent nature of the US/SA engagement and the fact that US authorities have signalled clear enthusiasm for continued application of the AGOA framework, such an outcome is unlikely.
AGOA FORUM
The Forum is part of an annual meeting of Trade Ministers and Senior Officials from countries benefiting from AGOA together with the US Department of Commerce officials. It is a review meeting on the AGOA implementation during the previous year while charting a way forward. The 2023 20th AGOA Forum is key in that it will inter alia take a decision on whether the AGOA is extended beyond 2025 and for how long. Further, the Forum will have to consider the reinstatement of some key countries such as Ethiopia whose eligibility has been withdrawn due to conflict and human rights violations.
BEYOND AGOA FORUM: TOWARDS RECIPROCITY AND THE AFRICAN CONTINENTAL FREE TRADE AREA
The Forum takes place when there are growing calls in the African trade policy community that AGOA should be replaced by a reciprocal trade agreement between the United States and Africa. It is not yet clear if a reciprocal trade agreement between the US and Africa can be concluded through the African Continental Free Trade Area. However, US strategists may not be keen for a reciprocal agreement as AGOA is a key foreign policy tool within the country’s engagement with Sub Saharan African economies.
Azwimpheleli Langalanga
Issued by the Helen Suzman Foundation, 1 November 2023
