AGOA to be Expanded to All of Africa and Extended to 2041

SUNDAY APRIL 28 2024

U.S. Senator Chris Coons (D-DE) speaks during a press conference following the weekly Senate caucus luncheons on Capitol Hill in Washington, US on March 12, 2024. 

By LUKE ANAMI

The US Congress has put forward proposals that would see the African Growth and Opportunity Act (Agoa) extended to 2041.

Senators Chris Coons of Delaware and James Risch of Idaho last week introduced the bipartisan Agoa Renewal and Improvement Act of 2024, which would see Agoa cover 54 African countries.

The extension is expected to integrate Agoa with the African Continental Free Trade Agreement (AfCFTA) to support the development of intra-African supply chains.

Enacted in 2000, Agoa is due to expire next year.

Speaking in Nairobi during the fourth edition of the regional American Chamber of Commerce Kenya (AmCham) business summit, US Secretary of Commerce Gina Raimondo said the plans to extend Agoa were on course.

“President Biden and our administration have made it a priority to renew Agoa. It is the decision of the US Congress, so we have to work with some of the members,” Ms Raimondo told The EastAfrican.

Coons and Risch’s proposed update would push Agoa beneficiaries to increase their exports under the agreement.

“This bipartisan bill aims to refine Agoa’s eligibility criteria, increase transparency, and hold US agencies accountable for their advice to the president,” Senator Risch said.

The proposed bill will require an Agoa Forum to be held annually no later than September 30.

The current statute requires Agoa beneficiaries to transmit a “textile visa” to US Customs and Border Protection (CBP) with every shipment of apparel. This bill will eliminate requirements for textile visas, boosting Kenya’s apparel and clothing exports to the US.

The CBP no longer requires textile visas to monitor imports, and they are in use only because statute requires them for trade with Agoa beneficiaries.

“The Agoa Renewal and Improvement Act is necessary to support continued economic development on the continent while further strengthening ties between the United States and partners in sub-Saharan Africa,” said Senator Coons.

Kenya’s private sector welcomed the new proposals and hoped that it would spur more exports to the US.

Jas Bedi, chairperson of the Kenya Private Sector Alliance (Kepsa) said the US has “tried to consider our views for the last 20 years.”

Agoa covers most—but not all—goods imported to the US from sub-Saharan Africa. The list of covered goods has not been substantially updated since the program was created in 2000.

But under the new Agoa Bill, this would task the U.S. International Trade Commission with producing a study into the economic effects of adding additional products to the list of covered goods.

To participate in the expanded rules of origin, North African countries would be required to meet Agoa’s eligibility requirements related to governance, human rights, and foreign policy.

While Agoa is limited to sub-Saharan African countries, this bill would modify Agoa’s rules of origin to allow inputs from North African AfCFTA members to count toward the requirement that 35 percent of a product’s value originate in the region.

This change would help support the development of intra-African supply chains.

The US legislators believe that Agoa would provide US businesses interested in sourcing from Africa or investing in its supply chain assurance that the region possesses long-term trade potential.

On income graduation, under current law, countries lose eligibility for Agoa benefits once they become “high-income” according to the World Bank’s measure of GDP per capita.

Yet developing economies often have volatile GDP numbers that fluctuate year-to-year.

This Bill would ensure that countries do not lose eligibility until they have maintained “high-income” status for five consecutive years.

Further, the president may extend a country’s eligibility for up to an additional five years to allow time for the negotiation of a free trade agreement.

On the clause on prohibiting imports of goods made with forced labour, the current statute prohibits the import of any goods made wholly or in part by forced labor.

The Uyghur Forced Labor Prevention Act supports enforcement of that prohibition on goods manufactured in China, especially goods from Xinjiang.

This Bill reemphasizes that prohibition, and calls on the Secretary of Commerce to submit a report on the procedures in place to ensure that imports under Agoa are compliant with these US laws.