African leaders are expected to arrive with a long list of items to address with President Barack Obama, with the need to expeditiously reauthorise the African Growth and Opportunity Act (AGOA) near the top of the list.
Originally enacted in 2000, AGOA provides eligible sub-Saharan African countries with duty-free access for certain exports to the US market. The purpose of AGOA is to expand US trade and investment with sub-Saharan Africa, stimulate economic growth and encourage sub-Saharan Africa’s economic integration.
The law requires that the US president determine which countries can take advantage of these benefits based on whether they meet certain criteria, including progress toward the establishment of a market-based economy, the rule of law, elimination of barriers to US trade and investment, economic policies to reduce poverty, efforts to combat corruption and bribery, and protection of internationally-recognised worker rights.
These determinations can have a dramatic impact on economic growth and job creation prospects for eligible countries. For example, in June 2014, President Obama reinstated Madagascar’s AGOA eligibility after that nation’s return to democratic rule, and withdrew Swaziland’s AGOA eligibility because of its failure to make progress on the protection of internationally-recognised worker rights.
AGOA, which has been described by US and African officials as the cornerstone in the foundation of US-Africa trade and economic cooperation, will expire for all eligible countries on September 30, 2015. African stakeholders who seek stability and certainty in their planning are anxiously awaiting action on its reauthorisation.
AGOA is non-reciprocal and unilateral, meaning that the trade preferences apply to US imports and not to US exports. As such, reauthorisation requires action only by the US government and does not involve formal multilateral or bilateral trade negotiations with African nations.
This has generated some confusion, with the African Union recently announcing the formation of a committee to devise a unified African position for AGOA “negotiations” with the Obama administration at the summit. Whilst President Obama and his administration are important in the debate over AGOA renewal, the legislative branch of government plays a more central role on whether to reauthorise AGOA, and if it is reauthorised, for how long and what changes are made.
Besides the requirement that the President sign the legislation before it becomes law, the US executive branch also has the critical role of examining AGOA’s effectiveness and presenting a reauthorisation proposal to the US Congress. However, Congress is ultimately responsible for the timing and content of reauthorisation legislation. Given that the legislative process can be opaque and complex, African stakeholders should learn the procedure and engage key players in order to shape the AGOA reauthorisation outcome.
Since AGOA’s inception in 2000, US imports under the law have increased by more than 300 percent — from US $7.6 billion in 2001 to $24.8 billion in 2013. Whilst this growth is impressive, Congress is expected to alter the current law to improve AGOA’s effectiveness and better support the US economy. These changes could occur at any stage of the legislative process.
The process has a number of steps, including drafting, consideration by committees of jurisdiction, consideration by the full House and Senate, and resolving differences between the chambers. AGOA reauthorisation legislation is currently in the drafting stage and an introduced bill is not expected until the end of the year.
African stakeholders seeking swift AGOA reauthorisation ought to temper their hopes as the already complicated legislative process is fraught with additional challenges.
Washington is currently mired in a partisan stalemate where Congress often waits until the last minute to consider expiring laws and sometimes fails to act prior to expiration, such as its failure to reach agreement to fund the US government in October 2013. Furthermore, AGOA reauthorisation momentum will be difficult to achieve during the Leaders Summit and concurrent 2014 AGOA Forum, as the events occur during a congressional recess when most members of Congress will be out of town.
The congressional elections in November create another complication, as members will spend an increasing amount of time campaigning in their states and districts rather than focusing on legislation.
In addition to the inherent difficulties of the congressional calendar this year, proponents of a swift AGOA reauthorisation face potential hurdles from US lobbying interests. Because the reauthorisation legislation is not yet introduced, it is difficult to predict the reaction of US interest groups, but some have already publicly conveyed concerns or proffered suggestions for AGOA reauthorisation.
For example, a diverse range of food and agricultural organisations wrote to Congress “to register their strong opposition to a long-term or permanent extension of AGOA.” Their primary concern is that certain AGOA countries maintain barriers to US agricultural exports which are unfair and incompatible with World Trade Organisation rules, ultimately jeopardising American jobs.
Although some African stakeholders hope that AGOA reauthorisation will be negotiated and resolved at next week’s summit, the process is expected to be more of a marathon rather than a sprint.
According to the summit schedule, African leaders will travel to Capitol Hill to meet with key members of Congress working on AGOA reauthorisation. The leaders should embrace this opportunity to engage those most responsible for the future of AGOA.
However, once they leave Washington and the international media attention on US-Africa relations has subsided, African proponents of AGOA reauthorisation must continue sustained efforts to inform and engage the Congress. Only then will the essential decision-makers understand the urgency to examine and renew AGOA, the cornerstone to the foundation of the US-Africa economic and trade relationship.
