African Countries Say Early Renewal More Important Than AGOA Reform

Advocates for the African Growth and Opportunity Act, watching the lengthy expiration of the Generalized System of Preferences benefits program, continue to say that renewal in 2023 rather than 2024 is necessary to retain manufacturing contracts, because businesses don't want to wait to see if the program continues in October 2025.

Mokhethi Shelile, trade minister for Lesotho, speaking at an event on AGOA hosted in Gaborone, Botswana, during the U.S.-Africa Business Summit, said getting a renewal in 2023 is more important than anything else. Because many African countries do not export much to the U.S., and therefore do not benefit from AGOA, Congress asked the International Trade Commission to analyze the program. It found that the use of AGOA is not growing, and that petroleum accounts for the majority of exports covered by AGOA, which does not advance development. Where countries have capitalized on apparel benefits -- AGOA's rule of origin is much less stringent than in traditional FTAs -- it has spurred jobs and development, but only Kenya, Lesotho, Madagascar and Ethiopia have capitalized on that. South Africa is also a significant user of AGOA, for auto parts and for agricultural exports.

Shelile said the last renewal in 2015 was done right before the program expired and was "very messy." So getting it done ahead of time is the thing he cares about above all.

"There is a sentiment that AGOA should be reformed, changed and so on. I’m indifferent to that," he said July 12. "If we push for that, how are we going to get it renewed this year?"

"We have a very bad example of the Generalized System of Preferences," he said, where members wanted to change the criteria to improve it and it has been expired for more than two and a half years.

"Renew first, then we can talk about making it better, if there is anything better to do," he said.

Lesotho's textile export sector employed 54,000 people before the pandemic, and only 25,000 now.

"Southeast Asia seems to be easier for them now," he said of apparel companies.

Mmusi Kgafela, Botswana's investment minister, said the success of AGOA in clothing is waning in his country, but Botswana is sending automotive components to South Africa that are then exported to the U.S. under the tariff preference program.

He said his companies find the logistics of exporting to the U.S. difficult. But, he said, Botswana wants AGOA extended indefinitely, not just for a 10-year period like this time.

Kgafela said some trade ministers in Africa are asking the U.S. government to stop adding additional eligibility rules, such as environmental issues. "As they get added on, it makes it more and more difficult for African countries to benefit," he said.

Several of the speakers at the program are from countries that export minimally to the U.S., and one said phytosanitary standards were blocking his growers.

Kgafela added, "We need to take stock of ourselves, those African countries that have not benefited as much."

The Atlantic Council will be issuing an AGOA report soon, but in an executive summary of its recommendations, the think tank said there should be fewer short-term eligibility decisions, such as removing Ethiopia from the program during the civil war. If eligibility does not come and go, it will "boost investor confidence and support long-term economic development, which is the best way for the US to achieve its broader commercial and political goals."

African countries should develop AGOA strategies, they said, and the U.S. could support strategies in a few large countries that are not exporting much now, such as the Democratic Republic of the Congo and the Central African Republic, the summary suggested.

Rama Yade, senior director of the Africa Center at the Atlantic Council, said at the event that she is pleased that Benin is sending tens of thousands of garments to the U.S. after factories there contracted with Children's Place. "That’s the Made in Africa I had in mind," she said.