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How will Africa engage the new US Administration about Trade Issues?


How will Africa engage the new US Administration about Trade Issues?

How will Africa engage the new US Administration about Trade Issues?

It has been announced that the African Union (AU) Ministers of Trade (AMOT) will be requested to engage the new US Administration on “negotiations” for a successor trade arrangement to the African Growth and Opportunity Act (AGOA).[1] In its present format AGOA runs till the end of 2025. One option is that it might be extended again.

In the bigger scheme of things this is a good idea. It could start a debate about Africa’s integration into the global economy in a post COVID world. However, AGOA cannot be “negotiated”. It is not an international Agreement. AGOA is a United States Trade Act, enacted on 18 May 2000 as Public Law 106 of the 200th Congress. It has since been renewed a number of times, most recently to 2025 and provides preferential access to the US market for goods from qualifying Sub-Saharan African (SSA) countries. Qualification is based on a set of conditions such as improving the rule of law and human rights at home and respect for core labour standards.[2] 

AGOA is a nonreciprocal trade preference program that provides duty-free treatment to US imports of certain products from eligible sub-Saharan African (SSA) countries. There are 49 candidate SSA countries with 39 currently eligible for the preference benefits. AGOA’s benefits go beyond mere market access and include closer collaboration between the US and African countries in other areas, technical and economic assistance, aid, investment funding, political and strategic collaboration in certain fields etc. In terms of tariff benefits and general eligibility criteria, AGOA builds on and extends the Generalized System of Preferences (GSP) of the US, which is a trade preference program that applies to more than 120 developing countries worldwide. AGOA covers more products and includes additional eligibility criteria beyond those in GSP.

The recently announced initiative to engage Washington on post-AGOA developments nevertheless offers an opportunity for assessing existing trade relationships and exploring future ones. In this instance there are specific and basic issues that need to be clarified at the outset. The objective needs to be clarified: Is this initiative about trade negotiations in the technical sense of the word, or about discussions regarding the continuation of a donor relationship of a particular kind? Who will be “negotiating” with whom and about what? In terms of what prior policy decisions? What mandate does AMOT have and on whose behalf will it be acting? Does this initiative not belong within the domain of the African Continental Free Trade Area (AfCFTA)?

And then there is of course the other side. There will soon be a democratic President in the White House, but it will take time before the contours of his global and African policies will be known. Does the Biden Administration actually have a policy about the future of AGOA, which expires after the next presidential election but could be extended? President Biden will adopt a less belligerent stance than his predecessor. He will opt for a constructive engagement with America’s allies, including with African nations (at least with those so inclined), but not much more is known at this stage. All indications are that Washington wants to return to rules-based multilateralism. It must also find appropriate responses to China’s growing international influence and its sway in Africa.[3] Long-term strategic objectives will be part of US-African discussions. And the bilateral talks between Kenya and the US launched in 2020 under the Trump administration will not necessarily be ignored.

Trade negotiations are complicated and take a long time to conclude. They cover an increasingly wide range of legal disciplines addressing trade in goods, trade in services, investment, intellectual property rights, competition, dispute settlement and related matters. Technological developments require a new consensus about e-commerce, digital trade, and regulatory harmonization for services trade. Such talks demand proper preparation, analyses of technical issues, understanding needs and prospects, prioritizing objectives, discussions with the private sector and launching talks about talks.

It will be good to learn more about the long-term aims behind the idea of talks with Washington about AGOA’s future. This may reveal how African nations want to be integrated into the global economy. There have also been suggestions about an African-European Union (EU) “continent to continent” deal. It is unclear who the parties would be and what it will cover. What will happen to the Economic Partnership Agreements (EPAs) officially favoured by the EU? Where will the SADC-EU EPA, which is in force since October 2016, fit in? It is a standard Free Trade Area (FTA) Agreement but only six African States in Southern Africa belong to it.[4]

The AU cannot really speak with one voice when it comes to representing 55 AU member states at very different levels of economic development. There is no supra-national AU institution with power over external trade matters. How will the preferences of individual African states be accommodated? Some additional plans need to be made and implemented before we will see en bloc discussions/negotiations with Washington.

[1] Done at the 14th Meeting of the AfCFTA Senior Trade Officials, 9-11 November 2020. AU/TI/AfCFTA/STO/14/FINAL/REPORT.

[2] https://agoa.info/about-agoa.html

[3] “Joe Biden will embrace allies—and enlist them to take on China”, The Economist, 23 Nov 2020.

[4] The 5 member states of the Southern African Customs Union (Botswana, Eswatini, Lesotho, Namibia, and South Africa) and Mozambique.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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