The African Growth and Opportunity Act ( AGOA ), a trade agreement at the core of US economic policy on Africa, is soon set to expire.
The US Congress enacted the AGOA Trade Act in May 2000. The alliance has been renewed many occasions, most recently in 2015, when Congress extended it to September 2025.
Since its execution, AGOA has provided available sub-Saharan American states with duty-free access to the US business for over 1,800 items.
However, business decisions by the Trump presidency, including the implementation of a common 10 % tax on all nations, threaten the future of AGOA.
Tsonam Akpeloo, President of the Association of Ghana Industries, told DW that Trump’s walk could result in people losing their jobs.
” One of our member companies producing materials and supplying them to the US market is employing around 5,000 people here in Ghana because of the AGOA, which has a willing market in the US,” Akpeloo said.
” If AGOA is no longer in place, that business will have to pay more taxes and it would suggest that the individuals employed will get affected,” he added.
Trump has imposed rough levies on some member states under AGOA, including Lesotho, with a 50 % tax slapped on the hilly region.
Although the price intrusion is enjoying a 90-day thaw from Trump, specialists across the peninsula are confused about what lies ahead.
US-Africa business ties
Between 2017 and 2020, the US was the third-largest target for Africa’s commercial products after the European Union and intra-African industry, according to the London School of Economics.
Data from the World Economic Forum also suggests that sales from apparel in Kenya under AGOA grew from$ 55 million ( €48 million ) in 2001 to$ 603 million in 2022, accounting for nearly 68 % of the country’s total exports to the US.
For these reasons, some fear that an ending to AGOA does have a severe effect on the 32 countries trading under the contract.
If Trump does not maintain the alliance, economists warn that short-term employment loss, hikes in commodity prices and higher costs of doing firm may harm American markets.
Is Africa prepared to negotiate with Trump?
” It’s like a big brother is doing you a favour and you have no place to deal,” Jane Nalunga, a Ugandan analyst, told DW.
For some observers, Africa’s ability to hold a negotiation chip in trade agreements with the United States is limited.
A place of possible contract today, experts believe, is the country’s unique planet minerals, which are of interest to Trump.
For Akpeloo, the continent must refocus on luxury products, such as ornaments and artifacts, which are currently not part of the products with preferential access to the US market.
He also strongly suggests that the continent negotiate an extension to the agreement and prepare measures to mitigate any fallout from its discontinuation.
Strategizing for the future
Economists believe it is better for Africa to negotiate as a collective rather than as individual countries, thereby strengthening the regional value chain.
Ghana’s Tsonam Akpeloo suggests leveraging platforms like the African Continental Free Trade Area ( AfCFTA ) as a key strategy for the continent’s economic future.
The AfCFTA is the world’s largest free trade area, both in terms of its geographical scope and the number of participating countries. It comprises 54 countries with a combined population of 1. 3 billion and a GDP of about$ 3. 4 trillion.
The World Bank projects that by 2025, the framework will lift nearly 30 million Africans out of extreme poverty and increase intra-African trade by 81 % if it is implemented effectively.
Boosting intra-African trade
” What needs to be done in Africa now is for the leaders of Africa to begin to analyze and take major steps in favor of securing the continent. The first thing that readily comes to mind is intra-African trade,” Akpeloo said.
Jane Nalunga, Executive Director of the Southern and Eastern Africa Trade Information and Negotiations Institute ( SEATINI), called on Africa’s trade policymakers to return to the drawing board.
” Africa should put its house in order. The failure to do so will continuously shortchange the continent,” Nalunga told DW.
” If we don’t put our house in order, we are going to continue exporting raw commodities, raw materials in the same way so it comes back to us. Whether we get AGOA back or not, it doesn’t matter,” Jane added.
Criteria for joining AGOA
According to the Office of the United States Trade Representative, for any nation to join AGOA’s preferential export terms to the US, they must establish or make continual progress toward establishing a market-based economy.
Participating nations must also uphold the rule of law and embrace political pluralism. In addition, countries must remove barriers to US trade and investment, enact policies that help reduce poverty, fight corruption, and respect human rights.
