The African Growth and Opportunity Act (AGOA) is a significant trade agreement established by the United States.
Here’s everything you need to know about AGOA
Enacted on 18 May 2000 as Public Law 106, AGOA aims to foster stronger economic ties between the US and qualifying countries in Sub-Saharan Africa (SSA). This trade act has been extended until 2025, offering enhanced market access to eligible SSA nations.
To be eligible for AGOA preferences, countries must meet specific conditions outlined in the legislation.
These conditions include:
- making continuous efforts to improve the rule of law;
- human rights; and
- core labour standards.
Initially, AGOA covered the period from October 2000 to September 2008. However, legislative amendments signed by US President George Bush in July 2004 extended AGOA until 2015. Additionally, a special dispensation relating to apparel was prolonged until 2007, but further extensions were granted until 2012.
In 2007, provisions were enacted to regulate the sourcing of local textile fabric for apparel manufacturing. These provisions aimed to encourage the utilisation of locally available fabric before resorting to imports. However, they were repealed in 2009.
A subsequent revision in September 2012 extended the apparel provisions until the end of 2015, aligning with the overall expiration of the AGOA legislation.
These provisions granted certain benefits to “lesser developed” countries, which met specific income thresholds and implemented a special apparel visa system along with favourable rules of origin requirements.
What is the aim of AGOA?
AGOA serves to build upon existing US trade programs, expanding the range of (duty-free) benefits beyond those provided under the Generalised System of Preferences (GSP) program.
Currently, the AGOA/GSP program offers duty-free access to the US market for approximately 6 500 product tariff lines. These include newly added “AGOA products” such as:
- apparel;
- footwear;
- wine;
- selected vehicle components;
- various agricultural products;
- chemicals;
- steel; and
- many others.
Following the initial 15-year validity period, the AGOA legislation was extended for an additional 10 years until 2025, demonstrating the enduring commitment to fostering trade relations between the US and SSA.
Key Facts about AGOA and Trade Statistics (Source: The USTR 2018):
- Total two-way goods trade between the United States and Sub-Saharan Africa increased by 5.8% from $36.9 billion in 2015 to $39 billion in 2017.
- Leading US goods exports to Sub-Saharan Africa include machinery, vehicles, aircraft, mineral fuels, and electrical machinery.
- Key export markets for the US in the region are South Africa, Nigeria, Ghana, Ethiopia, and Angola.
- Major US imports from Sub-Saharan Africa consist of oil, precious metals, cocoa, vehicles, and iron and steel.
- Leading suppliers from Sub-Saharan Africa to the United States include South Africa, Nigeria, Angola, Cote d’Ivoire, and Botswana.
- US investment in Sub-Saharan Africa reached $29 billion in 2016, with Mauritius, South Africa, and Nigeria being the primary destinations.
- Foreign direct investment from Sub-Saharan Africa in the US amounted to $4.2 billion in 2016, a significant increase compared to $1.6 billion in 2014.
AGOA has created valuable trade opportunities and strengthened economic ties between the US and Sub-Saharan Africa.
The statistics highlight the growth in bilateral trade and investment, underscoring the mutual benefits derived from this trade agreement.