AGOA for dummies: All you need to know ahead of next week’s Forum

South Africa and the US have enjoyed mutually beneficial trade through AGOA. Picture: Pixabay

South Africa and the US have enjoyed mutually beneficial trade through AGOA. Picture: Pixabay

Published Oct 26, 2023


The 2023 African Growth and Opportunity Act (AGOA) Forum will be held in South Africa next week, bringing together the governments of the United States and AGOA-eligible countries, as well as representatives from key regional economic organisations, the private sector, civil society, and labour.

South Africa is one of 35 countries that benefit from AGOA, a trade program between the United States and eligible African countries.

Under this agreement, these African nations can export specific products, like clothes and agricultural goods, to the US with reduced or zero tariffs (taxes); this special treatment aims to boost economic growth in these African countries and help them sell more goods to the US, ultimately improving their economies and reducing poverty.

To benefit from AGOA, countries need to meet specific criteria, such as having market-based economies and respecting human rights standards.

But what is AGOA all about and how does South Africa benefit from this trade program? Well, simply explained, AGOA provides a number of benefits to eligible African countries, including:

– Access to the US market

AGOA lets African countries sell items like clothes and farming products to the US without paying extra taxes. This helps African products sell better in America.

– Making money

By selling products to the US, African countries can make more money. This extra trade means more jobs and a better life for the people in these countries.

– Expanding product types

AGOA encourages African countries to sell different products, not just the usual items. This helps countries explore new businesses, making them less dependent on just one type of product.

– Attracting investments

AGOA can bring in money from US companies. These companies might invest in African countries, creating jobs and bringing new skills and technology.

– Learning and improving

AGOA supports African countries to meet trade requirements, build better infrastructure, improve production methods, and follow international rules.

– Good governance

AGOA encourages good leadership, human rights, and rule of law. If countries uphold these requirements, they can keep enjoying AGOA benefits, making their regions more stable and democratic.

– Joining global business

AGOA helps African countries become part of big international businesses. Their products can be part of large networks of production around the world, making African industries more competitive globally.

AGOA was enacted in 2000, and in 2021, trade between the US and Africa totalled $55 billion.

How South Africa benefits from AGOA

  • AGOA lets South Africa sell more than 1,800 products to the US without paying extra taxes. This means South African products can be sold in the country more easily.
  • AGOA has created many jobs in South Africa, especially in production and farming.
  • AGOA has helped South Africa's economy grow, adding about one percent to South Africa's GDP every year.
  • AGOA has helped South Africa explore new business paths instead of just selling minerals and metals.
  • AGOA has cultivated relations between South Africa and the US.

Some specific benefits include:

  • South Africa exports billions of dollars’ worth of vehicles and auto parts to the US each year.
  • South Africa exports a wide range of agricultural products to the US, including citrus fruits, wine, and beef.
  • South Africa’s exports millions of dollars’ worth of clothing to the US each year.

AGOA has been a successful trade program for both South Africa and the United States. It has helped to boost trade and investment flows, create jobs, boost economic growth, and promote good governance.

How the US benefits from AGOA

Just as South Africa and other sub-Saharan African countries benefit from this trade program, so does the US. Some of these benefits include:

– Increased access to African markets

AGOA lets American businesses sell their products to 35 African countries more easily. This helps the US companies reach more customers in Africa.

– New market opportunities

AGOA helps US businesses discover new places to sell their products in Africa. Many US companies have started selling in Africa because of AGOA.

– Increased exports

AGOA has helped the US sell more goods to Africa. In 2023, the US sold products worth $19.76 billion to African countries through AGOA.

– Job creation

AGOA has created jobs in the US by supporting businesses that sell to Africa. This means more people have found work.

– Economic growth

AGOA has helped the US economy grow by selling more and creating jobs. It adds to the country's economic growth.

– Geopolitical influence

AGOA has brought the US closer to Africa. It shows that the US cares about Africa's growth and development, making their relationship stronger.

Overall, AGOA is a mutually beneficial program that benefits both the US and sub-Saharan Africa.

Some US businesses that have reaped the rewards of AGOA include:

  • Coca-Cola
  • General electric
  • Cargill
  • Levi Strauss & Co
Source: AGOA

Other trade agreements between the US and South Africa

– The Trade, Investment, and Development Cooperative Agreement (TIDCA):

Established in 2008, TIDCA establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues.

– The Trade and Investment Framework Agreement (TIFA)

Signed in 1999 and amended in 2012, TIFA provides a forum for the two countries to discuss and resolve trade issues.

In 2022, US-South Africa trade totalled $25,5 billion. The top US exports to South Africa included machinery, vehicles, aircraft, and chemicals, while the top US imports from South Africa included minerals, metals, vehicles, and agricultural products.

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