An adjunct fellow at the Centre for African Studies at Howard University in Washington, DC, Michael Walsh, told Business Report that it would be incredibly difficult to secure an early extension of the African Growth and Opportunity Act (Agoa) as American politics remains deeply divided.
This as the AU Commissioner of Economic Development, Trade, Tourism, Industry and Minerals, Ambassador Albert Muchanga, told the 20th Agoa Forum yesterday that an extension would provide the required predictability and certainty to the markets.
The Agoa Forum is taking place in Johannesburg as about 30 African trade ministers, business people, civil society and trade unions debate the future of a trade agreement between Africa and the US that is due to expire on September 30, 2025 and should be renewed before then.
Muchanga said the introduction of the Agoa Extension Act of 2023 Bill to Congress last month by US Senator John Kennedy, with the intention of extending the programme for 20 years to 2045, and US President Joe Biden’s indication that the US administration would support measures to extend Agoa, would provide certainty to traders and encourage investments.
Walsh said there had been bipartisan support for Agoa but that might not be enough to secure an early extension, adding that there were many other time-sensitive pieces of national legislation that demanded the attention of Congress.
“It will take a lot of political capital to get those pieces of legislation through the divided institution before next year's elections. In the end, there may not be enough time and political capital left to consider a stand-alone Agoa extension,” Walsh said.
“If not, the question of Agoa extension may have to wait until the next Congress. That would present a high-risk scenario. The next Congress would have very little time to push through an extension before Agoa expires.
“That is why some Agoa supporters have started to advocate for a politically pragmatic approach for securing an early extension. They want to see an Agoa extension quietly inserted into the National Defence Authorisation Act. Of course, that presents its own problems.
“Even if that move succeeded, it would effectively reframe Agoa as a national security tool for maintaining a geopolitical overmatch with China. While such securitisation might be of interest to some senior members of Congress, it would not sit well with many African governments,” Walsh said.
Agoa was signed into law with the aim of helping sub-Saharan African countries raise living standards and create jobs through bilateral trade, not aid.
The opportunity in Agoa is that it allows eligible African countries to export some of their produce to America without paying tariffs, so that African goods are cheaper for American consumers to buy than goods from other countries that have to pay tariffs, and so that should encourage American consumers to buy more.
South Africa is the largest beneficiary and that is one of the reasons why South Africa is hosting the forum.
Minster of Trade, Industry and Competition Ebrahaim Patel officially opened the forum yesterday at the Nasrec Exhibition Centre at Nasrec.
In his opening remarks Patel highlighted that the goods on display showed the innovation and quality of goods made in Africa, and that although the focus of the forum was on Africa’s engagement with America, the goods had a worldwide appeal.
However, in June, some American legislators called for the relocation of the forum after the US ambassador to South Africa said weapons had been loaded on the Russian ship, the Lady R, in the South African naval base at Simon’s Town.
An independent investigation found no basis in fact for the alleged sending of weapons to Russia.
“Agoa is about trade, jobs and economic development, but it is not only about widgets. The forum is aimed at showing Africa’s place in history, which is why we have created a heritage walk here. At the dawn of civilisation people right here on the continent gathered around the fire to tell stories, so we have a tradition of great storytelling,” Patel said.
The legacy of African trade was not confined to goods, as people travelled far and wide to centres of learning such as Timbuktu, and Patel showed off a book that showed how important learning was to Africa before the colonial era.
“The Agoa Forum today is about controlling our destiny. Legacy is not destiny and the goods displayed here today show that made-in-Africa goods can compete with the best in the world,” Patel said.