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US markets: African agreement renewed

Trade and Marketing

The African Growth and Opportunity Act (AGOA), which gives sub-Saharan African nations preferential access to US markets, has been renewed for another 10 years. Beneficiary countries have warmly welcomed this decision.

This June, American President Barack Obama renewed the African Growth and Opportunity Act (AGOA) until 2025, following favourable votes from the US Congress and Senate. Enacted in 2000 during the Clinton administration, the act gives African nations duty-free access to the US market for approximately 7,000 product tariff lines.

To date, 39 of 49 sub-Saharan African countries are profiting from AGOA. In order to be eligible, each country must comply with a set of requirements regarding governance, labour standards and human rights.

According to a study carried out in April 2015 by the US Congressional Research Service, imports from the AGOA beneficiary countries account for only 1% of US total imports. Imported items mainly consist of hydrocarbon (67% of total imports in 2014), textile products – mostly from Kenya, Lesotho and Mauritius – and vehicles, primarily made in South Africa.

For agriculture and agribusiness, AGOA is showing weak results. According to a study conducted in 2012 by the Brookings Institution, agricultural products account for less than 1% of the AGOA exports (mainly citrus fruits, cocoa and wine). This poor trade is due to quotas set out prior to 2000 and the high level of custom duties on some items such as cocoa, cotton, dairy products and sugar. Furthermore, in some cases, it is difficult for beneficiary countries and their products to comply with US phytosanitary standards.

The chairwoman of the African Union Commission, Nkosazana Dlamini-Zuma, was glad to hear the news of the renewal of AGOA, which has created more than 1.5 million jobs all over the continent.

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