Froman Outlines Future US-Africa Trade Landscape at AGOA Forum

Competitive advantages that African Growth and Opportunity Act countries derive from U.S.-initiated tariff benefits may fade as more countries trend toward free trade agreements, U.S. Trade Representative Michael Froman said during the AGOA Forum Sept. 26 (here). Sourcing decisions may also increasingly lean toward other considerations, such as reputational risk and ease of doing business, he said. Despite the benefits of AGOA, Froman noted that “only a handful” of beneficiaries fully utilize AGOA apparel provisions.

He called for AGOA beneficiaries to prioritize export-led economic growth strategies “to create urban jobs, raise rural incomes, and reap a demographic dividend,” as Africa’s youth population grows. African countries and trading blocs should diversify export strategies to rely more on manufacturing, value-added agriculture and new online industries, Froman said. U.S. interest in boosting participation in African markets will grow as U.S. competitors adopt trade policies that will allow more preferential access to those markets, and African imports "will grow faster than the rest of the world," as the continent enters a period of steadier economic growth, Froman said.

House Foreign Affairs Committee Chairman Ed Royce, R-Calif., who introduced AGOA in 2000, said U.S. exports to Africa have gone up by more than 200 percent since then (here). He said he looks forward to engaging with U.S. and African officials about driving bilateral trade beyond AGOA. "In a few years, Africa’s consumer spending is expected to reach $1 trillion," he said. "That’s a massive untapped opportunity for U.S. business."

The U.S. must account for the different levels of readiness and trade capacity across the continent and any framework should facilitate African integration into the global trading system, Froman said. “We don’t pretend these are the only relevant principles. And we look forward to a robust debate about the way ahead today and in the coming months,” he said. “This is the start of a vital conversation.” The Office of the U.S. Trade Representative released a report last week charting ways to strengthen the U.S.-Africa trade relationship after AGOA expires in 2025 (see 1609230036). Froman and Kenyan Cabinet Secretary for Foreign Affairs and International Trade Amina Mohamed on Sept. 25 wrote in an opinion piece (here) in Project Syndicate that “policies resembling free trade agreements” could open data flows, provide more transparent regulations and foster greater access to service markets for African software industries, for example.

Assistant Secretary of State for African Affairs Linda Thomas-Greenfield said the U.S. and Africa should work harder to expand AGOA benefits to more countries and industries, and encouraged African countries to craft and implement “focused AGOA utilization strategies.” In a recent report to Congress, USTR signaled it could reinstate AGOA benefits for Swaziland and/or the Democratic Republic of the Congo if the countries make certain political reforms (see 1606290086). Policies should push greater African regional integration to attract investment and better mesh Africa with the global market, Thomas-Greenfield said, noting a World Economic Forum report that found that 12 percent of total African exports go to regional neighbors. “There’s a huge market right next door that you need to be able to take advantage of, even before you take advantage of the markets across the oceans,” she said.