Twenty-three years after the African Growth and Opportunity Act (AGOA) was put into force in May of 2000, many agree that the policies should continue as a beneficial program to assist with the growth of participating sub-Saharan African countries. The primary goal of AGOA is to stimulate economic growth, encourage economic integration, and facilitate increased trade and investment between the US and African nations.
This November, the annual AGOA Forum wrapped up in Johannesburg, South Africa. The program is currently set to expire in September 2025. In 2015, a ten-year extension was granted to the program, and as 2025 gets closer, the question of renewal is hanging; while some suggest another 10-year extension, others are pushing for an even longer extension to help assure long-term growth and investment in the eligible countries.
Under AGOA, eligible countries are granted duty-free access to the US market for a wide range of products, including textiles, apparel, and certain agricultural goods. The act also encourages US investment and ongoing business in Africa by incentivizing and supporting US companies engaged in trade and investment activities. AGOA creates a win-win for many US businesses operating in sub-Saharan Africa and also supports African businesses exporting to the US.
AGOA fosters economic ties by promoting job creation and supporting economic development initiatives on the continent. These initiatives also support the developing nations with provisions that seek to improve the economies and the livelihoods of many African citizens with human rights and workers’ regulations as part of eligibility. The program includes over 6000 products, allowing almost all the participating African countries’ exports to enter the US economy duty-free.
In turn, exports from the US also enter African markets with few issues and red tape as part of the participation in AGOA. For North Dakota, over $248 million in commodities were sold to Sub-Saharan African countries, including Nigeria, Ethiopia, South Africa, and Kenya being the largest purchasers, with cereals and edible vegetables accounting for over $150 million and vehicles/industrial machinery making up $15 million. These countries continue to be markets for expansion for many ND companies.
Reauthorization is on an earlier-than-anticipated schedule. The US Congress oversees the reauthorization, which comes up in 2025; however, there are many calls for this to happen early. Along with an earlier timeline, an increased extension into 2040 or beyond is being called for. Supporters say that a longer period of effectiveness will help solidify many investment opportunities and provide stability for the long term. AGOA has been periodically renewed and amended to adapt to changing circumstances and address new challenges.
In Africa, there are 54 countries, and currently, 35 are participating and trading with the US under this program. Each country’s renewal and eligibility is assessed annually. Participating counties need to qualify based on some of the following constraints to participate in the program.
- Elimination of US trade barriers and investment barriers
- Support Democracy
- Human rights protections
- Labor standards and workers’ rights
- Avoid involvement in actions that undermine US national security and foreign policy interests.
Countries do shift from time to time, being left in or out as policies shift and geopolitical issues arise. For 2023, President Biden announced that Uganda, Niger, and Gabon would lose access to the program. For Uganda, this is primarily based on human rights issues, while Niger and Gabon did not establish or make significant progress towards democracy. Mauritania’s access will be restored after significant progress in workers’ rights and the elimination of forced labor. The list of current eligible countries can be found here.
Utilization of some eligible countries and not others continues to be a challenge. This lack of utilization has been attributed to competing interests, lack of internet access/awareness, capacity/government investment and regional stability. The Brookings Institute offers great insights for a deeper dive into the differentiation of utilization: Here’s Why US-Africa trade under AGOA has been Successful for Some Countries but not Others.
Some of the largest criticisms of the program are that when access is removed, it impacts the workers from industries, causing many to lose their positions due to political instability, labor and workforce issues, and human rights concerns that are no fault to the workers themselves. Ethiopia remains a prime example of this from 2022 when their access was removed and 200,000 people lost their manufacturing and textile jobs because of the conflict happening many miles away. Other criticisms also include the provision that all trade barriers must be dropped, while other countries in the world enjoy duty-free access without these rules.
While improvements can likely be made, there are many benefits to this program and its continuation. In the coming months, conversations will continue to transpire regarding the potential extension of this program. Several lawmakers have already published their stance, and we will continue to see how the future of this program transpires.
AGOA stands as a testament to the collaborative efforts between the United States and eligible African nations, fostering economic development, and encouraging mutually beneficial trade relations. Over the years, AGOA has facilitated increased market access, promoted diversification of exports, and contributed to job creation and investment. While acknowledging its successes, challenges persist, and there is room for further enhancements. As more information becomes available, the NDTO will keep you up to date on more information regarding the future of AGOA.