South Africa hosts AGOA forum aims at strengthening US-Africa trade relations
South Africa hosts AGOA forum aims at strengthening U.S.-Africa trade relations
Modern Diplomacy | 1st November 2023
By Kester Kenn Klomegah
South Africa prepares to host the African Growth Opportunity Act (AGOA) forum to review critical challenges and obstacles adversely impacting on trade opportunities and economic cooperation between the United States and Africa. The United States first introduced the African Growth and Opportunity Act (AGOA) in 2000. It is the 20th AGOA forum scheduled from November 2 to 4 in Johannesburg, South Africa.
The AGOA Trade and Economic Cooperation forum seeks to expand and deepen trade and investment relationships between the United States and Sub-Saharan Africa. It also encourages regional integration and further reaffirms Africa’s position as a capable economic partner for the world. It aims at promoting economic growth, reduce poverty and foster a stronger trade partnership between the United States and African countries.
The Johannesburg forum will also be a follow-up on some of business pledges taken during mid-December African leaders summit in Washington. At that meeting, US President Joe Biden allocated $55 billion for various investment projects across Africa. The State Department reports indicated that African countries are looking forward to strengthening trade relations. The White House plans to offer new favourable conditions as well as extend or would renew the trade partnership which expires in September 2025.
As well-known, AGOA gives eligible sub-Saharan African countries duty-free access to the United States market for more than 1,800 products and simultaneously create grounds for trade and commercial services. And the majority of African governments and industry groups are pushing for an early 10-year extension without changes in order to reassure business and new investors who might have concerns over AGOA’s future.
South Africa is working to secure a renewal and extension of AGOA, including through direct engagement between government and business representatives, as well as with members of the US Senate and Congress across party-political lines. During a recent parliamentary briefing, Minister of Trade, Industry and Competition, Ebrahim Patel, told Members of Parliament that South Africa’s participation in AGOA benefits neighbouring countries through shared value chains.
Reports indicated that U.S. President Joe Biden would terminate the participation of Gabon, Niger, Uganda and the Central African Republic in the African Growth and Opportunity Act (AGOA) trade program.
Biden said he was taking the step because of “gross violations” of internationally recognized human rights by the Central African Republic and Uganda. He also cited Niger and Gabon’s failure to establish or make continual progress toward the protection of political pluralism and the rule of law. Burkina Faso, Mali and Guinea have all previously been expelled from AGOA after military coups in those countries.
“Despite intensive engagement between the United States and the Central African Republic, Gabon, Niger, and Uganda, these countries have failed to address United States concerns about their non-compliance with the AGOA eligibility criteria,” Biden said in an official letter to the speaker of the U.S. House of Representatives.
Their expulsion from AGOA trade program is set to take effect from the start of next year (2024) and is likely to impact their economies, as AGOA has been credited with promoting exports, economic growth and job creation among participating countries.
The Democratic Alliance, South Africa’s main opposition party, has waged its own campaign for South Africa to continue participating in AGOA and warned that its exclusion would have a devastating impact on the economy, with the vehicle manufacturing industry among those that would be badly affected.
“Should South Africa’s access to AGOA be revoked as a consequence of its allegiance to Russia, 112,000 jobs in the automotive sector and 435 billion ($23 billion) in automotive trade could be wiped out,” the party said in a statement. “South Africans need to realize that our country’s jobs and the security of our economy are intrinsically linked to trade founded on global alliances.”
South Africa lobbies to retain preferential access to U.S. market, so majority of African countries. A number of high-powered delegations, in a bid to defuse tensions over its relations with Russia, have visited Washington. Finance Minister Enoch Godongwana has spoken with US lawmakers and heavily lobbied for South Africa to retain its eligibility to export goods duty free to the US under the African Growth and Opportunity Act.
United States currently seeks to build on its existing economic and trade relations with Africa, especially this fast-changing geopolitical situation. Without much criticisms, AGOA has helped during these years in supporting a fledgling manufacturing sector in industrial parks, it has had a meaningful impact in sectors like Ethiopia’s and Kenya’s textile industry and South Africa’s automotive industry.
United States has been gearing up so as not to lose its economic influence across Africa. South Africa’s trade amounted to an estimated $25.5 billion in 2022. Exports were $9.3 billion, imports were $16.2 billion. The U.S. goods and services trade deficit with South Africa was $6.9 billion in 2022.
Research also shows that since 2021, the U.S. Government has helped close more than 800 two-way trade and investment deals across 47 African countries for a total estimated value of over $18 billion, and the U.S. private sector has closed investment deals in Africa valued at $8.6 billion. U.S. goods and services traded with Africa totaled $83.6 billion in 2021.
U.S. Trade Representative Katherine Tai, ahead of the Africa Growth Opportunity Act forum in Johannesburg, has expressed optimistic that AGOA, which provides preferential trade arrangements for sub-Saharan African countries with the United States, would be renewed by the Congress. And of course, members of the U.S. Congress want to see AGOA benefits shared widely and used to create goodpaying jobs across Sub-Saharan Africa.
At previous high-level engagements, there was consensus to extend AGOA beyond 2025. The suggestion has been tabled before the US Administration. United States Trade Representative, Ambassador Katherine Tai, is committed to robust trade and economic collaboration with Sub-Saharan Africa.
During one of the meetings, Ambassador Katherine Tai, the African Ministers, and the Africa Group of Ambassadors underscored the following:
* An extension of AGOA for at least ten years with the inclusion of African countries.
* The importance of Africa speaking with One Voice in all US-Africa trade and investment engagements.
* Enhanced commercial diplomacy between the US and Africa. There was also agreement that South Africa would host the next AGOA forum this year 2023.
Most United States enterprises are banking to explore the single continental market, the African Continental Free Trade Agreement (AfCFTA). As a corporate project initiated by the African Union (AU), it has the potential to unite more than 1.4 billion people in a $2.5 trillion economic bloc. It has the potential to generate a range of benefits through supporting trade creation, structural transformation, productive employment and poverty reduction. The AfCFTA opens up more opportunities for both local African and foreign investors from around the world.
Corporate Council on Africa, which is a leading reputable American business association, told me that the main focus is to increase US-Africa trade and investment. It further characterized the forum as a platform to highlight the progress made across sectors of Africa’s economy, including expanding opportunities in agriculture, industry and manufacturing, technology, health, agribusiness, tourism and financial services.
Corporate Council on Africa has assisted the government in contracting deals close more than 800 two-way trade and investment deals across 47 African countries for a total estimated value of over $18 billion, and the American private sector has closed investment deals in the continent valued at $8.6 billion since 2021.
The African Union (AU) spearheads Africa’s development and integration in close collaboration with the individual countries on the continent, with the Regional Economic Communities and African citizens. With its vision to accelerate progress towards an integrated Africa, it works closely with United States. Most importantly, the United States has more room for maneuvering with its institutional instruments. It now works closely with AU’s AfCFTA. On the other side, Africans flexibly visit the United States more than anywhere else in the world.
The AU has its representative office facilitating and coordinating activities and business interest in Washington. The White House and the Biden-Harris administration have been prioritizing comprehensive multifaceted relationships with various countries across Africa. The Biden-Harris Administration is committed to strengthening US-Africa trade and commercial relations and engaging Congress on the next steps for AGOA.
