TRALAC - Trade Law Centre

US to initiate ‘exploratory talks’ on post-AGOA model at AGOA Forum

Tuesday, 10 July 2018 Published: | Terence Cremer

Source: Engineering News (South Africa)

United States Trade Representative (USTR) Robert Lighthizer will use this week’s African Growth and Opportunity Act (Agoa) Forum in Washington DC to initiate “exploratory talks” with African governments on a possible trade model that could be implemented when the unilateral programme expires in 2025.

Assistant US Trade Representative for Africa Connie Hamilton said on Monday that Lighthizer aimed to “start a conversation” on the post-Agoa model at the government-to-government meeting, which is scheduled to take place on July 11.

Agoa was first signed into law by President Bill Clinton in May 2000, but has subsequently been extended several times, with the latest ten-year extension signed in 2015 by President Barack Obama. Currently, 40 African countries are eligible for duty- and quota-free market access to the US on 6 400 tariff lines.

In its 2018 biennial report on the implementation of Agoa, published in late June, the USTR reported that total two-way goods trade with sub-Saharan Africa rose 5.8% in 2017 to $39-billion, compared with $36.9-billion in 2015.

US goods exports fell to $14.1-billion, from $18-billion, over the period, partly as a result of lower aircraft sales, while US goods imports rose to $24.9-billion, from $18.8-billion, primarily owing to rising commodity prices.

The top five sub-Saharan African exporters under Agoa last year were Nigeria ($6.1-billion), South Africa ($2.9-billion), Angola ($2.3-billion), Chad ($590-million) and Kenya ($408-million). However, South Africa was the largest non-oil beneficiary by value, accounting for 68% of non-oil exports to the US under the programme.

South African exports to the US under Agoa have increased three-fold since its enactment in 2000, primarily from industry and agricultural sectors.

A dispute over US poultry exports to South Africa resulted in an out-of-cycle review in 2015, which almost led to the country’s suspension from the programme. The country’s eligibility was eventually affirmed only after an eleventh-hour deal struck on January 6, 2016, whereby South Africa agreed to a yearly quota for bone-in chicken imports from the US.

In a telephone briefing on Monday, Hamilton said the US remained committed to ensuring that African countries maximised the benefits under the programme.

However, she argued that a plan should also be put in place for the trade relationship that would prevail once Agoa expired.

“Even if the programme does continue, we don’t believe that Agoa has been the game changer that [was hoped for] in promoting the kind of diversity and broad-based benefits to all the countries that are eligible for Agoa. So, we would still want to go beyond Agoa.”

Therefore, Lighthizer would use the forum to urge African countries to use the upcoming seven-year window to devise a new trade template.

“We are trying to develop a model free-trade-area agreement that we can apply to any country that is willing to engage with us,” Hamilton explained.

“We will start with exploratory talks to figure out what’s possible and what the red lines are; what do we as the US need to see, what do our partners need to see and how do we get there.”

South Africa is being represented at the forum by Trade and Industry Minister Dr Rob Davies.

In a statement released ahead of his departure for the US, Davies said the 2018 forum provided a platform for discussion on how to preserve the Agoa preferences.

Davies was also keen to explore how the programme could support regional integration efforts in the continent, especially the regional value chains in light of the recent signing of the Africa Continental Free Trade Agreement.

It is also possible that South Africa could raise the recent imposition of tariffs on South African steel and aluminium exports to America, following a proclamation signed in March by President Donald Trump under Section 232 of the Trade Expansion Act.

Hamilton said the duties were imposed as a response to overcapacity, fuelled by subsidies and other forms of State intervention in countries such as China. “Although we recognise that the problem does originate in China, it’s impact is being felt across the world, as lossmaking production gets exported widely.”

The tariffs, she indicated, had been imposed in a bid to deal with the overcapacity problem.

 

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