U.S.-Africa: Opportunities for the United States and Africa to Deepen Trade and Economic Relations
As countries like the United States compete to increase their ties to Africa and many of the fastest growing economies in the world, strengthening trade with the region is becoming increasingly important. Recently, the U.S. government has acknowledged China and Russia’s growing presence in Africa, building both economic and security ties, and the need for a greater U.S. response. This comes at a time of uncertainty for U.S.-Africa relations as one of the only programs focused on the trade relationship between the United States and Africa -- the African Growth and Opportunity Act (AGOA) -- will expire in less than three years.
Background on AGOA
AGOA, the U.S. preferential tariff program that provides duty-free access into the United States for over 1,800 products imported from sub-Saharan African countries, is set to expire on 30 September 2025. Currently, there are 36 African countries eligible for the program. AGOA was enacted in 2000 and was last renewed in 2015.
In January 2022, in advance of the program’s expiration, the Chairman of the House Ways & Means Committee, Richard Neal (D-MA), requested the U.S. International Trade Commission (USITC) to provide a report on the AGOA program, its usage, as well as industry case studies “to better understand the relative competitiveness of each sector and its impact on workers, economic development, and poverty reduction.” USITC estimates the report will be finished by March 2023.
Revocation of AGOA Benefits and Calls for Changes in Eligibility Requirements
In 2021, Ethiopia’s eligibility was revoked by the Biden Administration due to human rights concerns stemming from conflict in the Tigray region. In late October, the government of Ethiopia responded that the revocation of its AGOA status and loss of AGOA benefits have negatively impacted its economy and citizens, such as women involved in the textile sector, that did not have a hand in the civil war. In early November, President Biden announced that he intends to remove Burkina Faso’s eligibility for AGOA on 1 January 2023, as that country’s government has not established rule of law or political pluralism.
Stakeholders have been calling for conditionality requirements to be included as part of the USITC report on AGOA. During a recent USITC hearing on AGOA, several attendees spoke on AGOA’s conditionality requirements and the impact of Ethiopia’s suspension. Mosa Mkhize, a public policy adviser of the Africa Practice Group at Covington & Burling, asked USITC to review how the program’s conditionality requirements are structured. Mkhize cited the significant job losses that resulted from the 2009 suspension of Madagascar’s AGOA benefits following a coup in the country. He explained that losses could have been mitigated if the United States had imposed targeted sanctions on those responsible for the coup instead of the AGOA revocation.
Advocates for Stronger Partnership Between the United States and Africa
In addition to AGOA, there are calls for new measures to strengthen economic ties between Africa and the United States. For example, the Trade Finance Advisory Council (TFAC) recommended that the U.S. Department of Commerce “take a more strategic lead” on existing U.S. initiatives and create more finance opportunities for African diaspora, especially for small businesses. Prosper Africa is an existing U.S. initiative dedicated to improving trade relations which provides financing, market intelligence, and other services aimed at promoting U.S. businesses’ export operations to African markets. TFAC recommended setting baselines to measure the progress of the Prosper Africa initiative, such as tracking number of jobs created, number of businesses expanded, number of export related events held and more.
Leaders outside of the United States are also calling for strengthened ties between the United States and Africa. The African Continental Free Trade Area (AfCTA) Secretary-General, Wamkele Mene, stated during a speech at the 14th U.S.-Africa Business Summit in Morocco that the United States has not fully operationalized opportunities in Africa and that “the United States has fallen behind other trading partners, including China and the European Union, in its economic engagement on the continent.” Mene also expressed that “the United States must develop a new trade policy with Africa that engages the continent as a whole.” Similarly, World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has said that over the past two decades, China has overtaken the United States as both an importer of African products and as a destination for Chinese exports. She has noted that the United States’ policies are moving in the right direction but emphasized that efforts need to continue advancing. She praised the AGOA program and continues to advocate for its expansion.
U.S.-Kenya Partnership and AGOA
In a time of uncertainty for AGOA’s renewal, countries like Kenya have pivoted towards negotiating bilateral trade programs. In July 2022, the United States Trade Representative (USTR) announced the U.S.-Kenya Strategic Trade and Investment Partnership that covers digital trade, agriculture, small and medium-sized businesses, labor and the environment, and will be accompanied by a “detailed roadmap” that is in the works to be available in the coming months.  However, USTR has confirmed that the agreement will not address tariff barriers. Betty Maina, Kenyan Cabinet Secretary for Industrialization, Trade and Enterprise Development, recently addressed the statement by saying “what we are currently in discussions over is the development of a strategic trade and investment partnership which is a placeholder for a full Free-Trade Agreement (FTA) in the future”. Maina has noted that the partnership is meant to provide “certainty post-AGOA.” Maina elaborated in a separate interview that Kenya’s efforts to attract long-term investment have been impacted by the approaching AGOA expiration. The Kenya Association of Manufacturer’s filed comments with the USTR requesting duty-free access be continued through either AGOA or bilateral means. In their submission, the group notes that, “the contribution of AGOA to creating job opportunities cannot be underestimated.” In August this year, discussions on AGOA’s renewal took place with Kenya during a visit to Nairobi by U.S. lawmakers.
U.S. Strategy Towards Sub-Saharan Africa
In August 2022, U.S. Secretary of State, Antony Blinken, traveled to South Africa and launched the Biden Administrations’ Strategy Towards Sub-Saharan Africa. This strategy acknowledges African countries as geostrategic players as countries like China and Russia seek to leverage their influence in the region for their own interests. The Administration’s strategy also recognizes countries in Sub-Saharan Africa as critical partners to the United States in tackling global issues like climate change, food insecurity and global pandemics and further developing the participating parties’ economies through deepened bilateral cooperation in trade and investment. The strategy encompasses commitments aimed at improving the trade partnership manifest such as, building upon existing presidential initiatives (such as Power Africa, Prosper Africa, PGII, and an initiative on digital transformation), trade negotiations and customs-to-business partnerships with African partners. It also affirms that the Administration will work to ensure the future of AGOA and will support the implementation of AfCFTA.
The AfCFTA Act of 2022
On 30 November, the Strengthening the AfCFTA Act of 2022 was introduced to congress. If implemented, USTR will be required to develop a 10-year federal strategy to support AfCTA and promote trade with AfCFTA members. Proposed policies are aimed at improving customs procedures and supporting the development of trade-related infrastructure, such as major intra-African trade corridors. An evaluation to identify U.S. industries that have an advantage in Africa, compared to other countries, in order to promote trade and investment in those industries has also been proposed as part of the act. To supplement the USTR 10-year federal strategy, the U.S. Agency for International Development would receive $200 million a year, from 2025 until 2034, to establish an AfCFTA trade capacity-building program. The adoption of the Strengthening the AfCTA Act of 2022 could create new opportunities for both U.S. businesses and businesses located in AfCTA member countries.
Future Outlook and Considerations
The United States will hold an AGOA Ministerial, starting on 13 December 2022, during the U.S.-Africa Leaders’ Summit. USTR Katherine Tai and sub-Saharan African trade officials will discuss AGOA, and other possible future trade facilitation and investment programs. Ambassador Tai has expressed interest in further engagement on the future vision for AGOA. As the United States continues to strengthen its trade ties with Africa, U.S. exporters should monitor for new opportunities. For example, strategies, policies and announcements from this year foreshadow the possibility of Congress expanding AGOA’s scope to also include Northern Africa.  If the AGOA program is renewed and/or expanded, more trade and investment will be redirected to Africa, creating the potential for it to become a major supplier and consumer market for U.S. businesses.
Africa United States Trade Representative
U.S Strategy Toward Sub-Saharan Africa White House (8 August 2022), page 5
African Growth and Opportunity Act (AGOA) U.S. Customs and Border Protection (14 September 2021)
AGOA Eligible and Ineligible Countries United States Trade Representative
About AGOA AGOA.info
USITC to Investigate the African Growth and Opportunity Act Program and its Usage United States International Trade Commission (16 February 2022)
ITC launches probe of AGOA InsideTrade (22 February 2022)
Ethiopian government to ITC: AGOA suspension harms civilians InsideTrade (1 November 2022)
Letter to the Speaker of the House of Representatives and the President of the Senate on the President’s intent to terminate the designation of Burkina Faso as a beneficiary sub-Saharan African country under the African Growth and Opportunity Act White House (2 November 2022)
TFAC Recommendations Summary Third Charter Term (2020-2022) International Trade Administration (August 2022)
AfCFTA secretary-general: U.S. must take ‘whole of Africa’ approach to trade InsideTrade (1 August 2022)
Okonjo-Iweala: U.S. must step up trade policy, supply chain efforts in Africa InsideTrade (22 July 2022)
Eyeing ‘quick progress,’ U.S. and Kenya announce new trade initiative InsideTrade (14 July 2022)
USTR seeks feedback on U.S.-Kenya trade and investment initiative InsideTrade (4 August 2022)
Maina: U.S.-Kenya trade partnership a ‘placeholder’ for future FTA InsideTrade (14 September 2022)
Maina: U.S., Kenya goals ‘haven’t changed’ in pursuit of reframed trade deal InsideTrade (15 August 2022)
Kenya frets about future trade with U.S. Politico (26 September 2022)
Sen. Coons: AGOA renewal, FTA ‘prospects’ key in talks with Kenyan leaders InsideTrade (24 August 2022)
Secretary Blinken’s Travel to Cambodia, the Philippines, South Africa, the Democratic Republic of the Congo, and Rwanda U.S Department of State (29 July 2022)
Strengthening the AfCFTA Act of 2022 Congress.gov (30 November 2022)
Tai to host AGOA ministerial in December InsideTrade (26 July 2022)
Trade and customs issues included in new Sub-Saharan Africa strategy AGOA.info
Comments are closed.
The TradeMoves blog allows our team to share and connect with our followers. We hope to continue sharing our insight and providing helpful tips.