The Future of the AGOA Agreement

The AGOA agreement between the USA and African states has brought a lot of benefits over the years. As we wrote in this Newsletter recently, the African Heads of State in their meeting with the US President in December asked that the agreement be renewed in 2024, a year earlier than its official renewal date in order to avoid possible problems during next the US Presidential election. That proposal has not yet been acted upon, but the US Administration has called for comments on AGOA by 7 July. A hearing will take place on 24 July.

Readers will recall that the US Administration has used the agreement to punish what it sees as wayward African states. At present 9 countries are excluded from AGOA: Burundi; Cameroon; Eritrea; Ethiopia; Guinea; Mali; Mauritania; Somalia; Zimbabwe. Two others are considered to be too developed (Equatorial Guinea, and Seychelles) and 2 countries have removed themselves from the agreement (Sudan and South Sudan). Discussions are now taking place in Washington to remove Uganda for its new anti-LGBTQ law and South Africa for allegedly selling arms to Russia last year.

Will this cause a problem for these 2 countries? Uganda has some export to the USA which would be affected, but the USA is SA’s second biggest export market after the EU. Removal from the AGOA agreement will be felt hard in many sectors, specifically agriculture, and small industrial production. At the same time, a number of Bills before Congress are aiming to remove the generous de minimis rule which allows exporters to the US to bring in goods worth up to $900 without customs duties. We have reported on this issue in previous Newsletters (see also the article above on the EU and the de minibus rule). The latest US proposal would only offer the benefits of de minimis if the exporting country offered reciprocal benefits (which excludes most African states).

As an example of the beneficial effect of the AGOA agreement, Kenya recently released data that shows that the number of jobs created by AGOA in Kenya exceeds 66,260 and the value just of apparels exported from Kenya via Export Processing Zones (EPZ) under the agreement hit a new high of Sh54.1bn last year – a 10.8% rise from the Sh41.6bn in 2018.