The progress of the commercial legislation of the States-Unis in ce qui concerne l'Afrique will be the main subject of discussion at the AGOA Forum in November in Johannesburg. Deux experts en commerce soutiennent que les États-Unis et l'Afrique peuvent s'appuyer sur cette législation pour soutenir l'intégration économique, reinforcer les capacités des PME et atteindre les objectifs de création de richesse.

U.S. trade law progress with Africa will be the main topic of discussion at November's AGOA Forum in Johannesburg. Two trade experts argue that the United States and Africa can leverage legislation to support economic integration, strengthen the capacity of small and medium-sized businesses (SMEs), and achieve wealth creation goals.

Who benefits?

Assuming AGOA is renewed, AfCFTA member countries eligible for AGOA will continue to exploit its benefits and will also be able to enter into bilateral and regional agreements without infringing on their rights and obligations under the AfCFTA.

However, opponents of AGOA in both the United States and Africa argue that it benefits neither the United States nor Africa. On the US side, some producers oppose it, claiming it encourages dumping and competition from low-quality imported goods. They argue that imported products must meet labor, environmental and product quality standards. American producers therefore pushed to prevent the importation of certain products, including sugar.

For their part, some in Africa claim that AGOA exports are dominated by primary products from extractive industries and low-skill services. They argue that this undiversified sectoral approach undermines the ability of AfCFTA member countries to strengthen SMEs and produce finished products.

Proponents of AGOA, on the other hand, argue that it has benefited both the United States and Africa. On the American side, AGOA eligibility requirements are a way to induce African nations to adopt their own forms of democratic values. On the African side, it allows eligible countries to boost trade, economic growth and development, including increasing investment and earning US foreign exchange through access to US markets. In 2022, US AGOA imports increased by 57% to $9.4 billion, from $6 billion in 2021. AGOA products include petroleum, clothing, footwear, wine, certain vehicle components, some agricultural products , steel and chemicals.

The US government currently designates 14 of the 54 AfCFTA member countries as AGOA ineligible and non-beneficiary; 35 of the 54 AfCFTA countries are eligible for AGOA benefits. The legislation grants eligible nations tariff-free access to markets and economies worth $25 trillion, including more than 1,800 products. Additionally, apparel exports from Africa to the US under AGOA increased by approximately 16% from $1.2 billion in 2019 to $1.4 billion in 2021. In 2022, the United States was the largest market for annual garment exports under AGOA from African nations, which amounted to $1.416 billion. However, in comparison, African export figures for all AGOA-eligible African countries together accounted for only 5% of garment exports worth $36.5 billion from China to the US during the same year. .

Room for improvement in a changing landscape

Therefore, there is still room for improvement and the time is right for the United States and Africa to take proactive measures. The AGOA legislation should continue to strengthen the capacity of eligible AfCFTA member countries to take full advantage of its benefits. It should help them achieve economic integration of the AfCFTA, strengthen the capacity of SMEs and achieve the wealth creation objectives of the AfCFTA.

The planned renewal of AGOA in 2025 will occur at a time when the United States and Africa are witnessing emerging and competing global geoeconomic and geopolitical interests. The growing economic strength of the AfCFTA and the BRICS bloc led by Brazil, Russia, India, China and South Africa continues to shift interests and the geoeconomic and geopolitical landscape from a unipolar world dominated by the United States to a multipolar world that strengthens bargaining power and the influence of emerging African market nations.

In March 2023, some countries, including BRICS members China and India, launched separate projects to de-dollarize trade with several countries, including African nations Tanzania, Kenya and Uganda.

In addition to de-dollarization, in the medium and long term, the BRICS countries plan to strengthen their geoeconomic dominance through a common currency similar to the EU. The trading bloc has also become very popular among emerging markets, with six strategically geo-economic countries - Saudi Arabia, Argentina, Ethiopia, Egypt, the United Arab Emirates and Iran - joining in August 2023 and more than 20 countries seeking join.

Turning challenges into opportunities
Consequently, the economic and political stakes are high for the United States to maintain its past geoeconomic and geopolitical dominance. China, Russia and India do not require AGOA-type governance conditions for trade and investment opportunities with Africa. However, regardless of the growing influence of these actors, the United States must take proactive and dynamic steps to reform its trade relations, based on mutual non-zero-sum interests. He should enter into additional trade instruments with African nations and pass the AfCFTA bill that would direct the U.S. trade representative to develop a 10-year federal strategy to promote the free trade zone. It should establish free trade agreements (FTAs) that allow for joint ventures with African SMEs with the aim of strengthening their manufacturing and production capacity.

African countries must help themselves

In implementing their AGOA benefits, they cannot rely solely on U.S. capacity-building support, but must help themselves. Obviously, being eligible for AGOA does not guarantee that they will fully take advantage of the benefits of AGOA and achieve their goals in the AfCFTA. To benefit from such US support, eligible African nations must take proactive steps to overcome energy, infrastructure, institutional and policy challenges that undermine the manufacturing and production capacity of local SMEs. They must provide affordable and reliable energy and infrastructure to businesses. They must also create an enabling policy environment to attract foreign investment and joint partnerships with their local SMEs.

In particular, they must ensure that access to AGOA benefits includes a broader spectrum of diversified sectors, demographic groups and geographic regions of AfCFTA member countries.

In 2021, imports to the United States under AGOA were primarily primary products and services. Products include crude oil ($1.7 billion); clothing ($1.4 billion); transportation equipment ($949 million); minerals and metals ($897 million) and agricultural products ($715 million). Most of the AGOA benefits go to the top five exporters to the United States: South Africa with goods worth $2.7 billion, mainly vehicles, parts, ferroalloys and jewelry; Nigeria with assets worth $1.4 billion, mainly crude oil; Kenya with goods worth $517 million, mainly clothing, macadamia nuts and fresh flowers; Ghana with goods worth $324 million, including crude oil, cocoa and cassava; and Angola with goods worth $300 million, exclusively crude oil. Nigeria is the largest oil exporter and South Africa is the largest non-oil exporter and has the most diversified products, ranging from passenger vehicles and yachts to frozen sorbet and citrus fruits.

The negative consequences of trading in undiversified primary products and concentration in limited geographical regions are that AGOA-eligible countries are unable to strengthen their local women- and youth-owned SMEs to manufacture and trade African value-added finished products.

AGOA-eligible AfCFTA member countries must therefore go beyond exporting a narrow spectrum of primary products in a saturated textile market and low-skill service industries.

Advantages of Free Trade Agreements (FTA)

Regardless of the benefits of AGOA, AfCFTA member countries should also seek opportunities to enter into FTAs with the United States. They must also capitalize and expand additional opportunities to use LAC to strengthen the manufacturing and production capacity of local SMEs. They must create and implement an enabling environment to attract joint partnerships with companies from developed economies and strengthen such local capacity.

Unlike AGOA, a free trade agreement with the United States is a binding bilateral trade and investment treaty that will provide signatories with equal opportunity and discretion to enter into mutually beneficial agreements that strengthen their regional comparative advantage and local manufacturing capabilities.

So far, Morocco is the only African country that has concluded an FTA with the United States. But assuming the Biden administration renews the 1974 US Trade Promotion Authority, which expired in July 2021, Kenya will negotiate its FTA with the United States and other countries will continue to explore possibilities for negotiating similar agreements.

Finally, assuming AGOA is renewed as expected in 2025, the legislation will continue to be a useful tool in strengthening trade relations between the United States and Africa. Unquestionably, there is room for improvement on both sides, both in the United States and in Africa; but the legislation has benefited both parties. It has boosted exports, created wealth and strengthened the economic development of eligible AGOA members who are also members of the AfCFTA.

Article source: African business