TRALAC - Trade Law Centre

Business needs to extract more from AGOA

Thursday, 03 July 2003

Source: Engineering News

Trade and Industry Deputy Minister Lindiwe Hendricks believes there is still significant scope for South African and other African companies to more fully exploit the benefits of the African Growth and Opportunities Act (Agoa), particularly now that President George W Bush has extended the duration of the legislation.

Hendricks was speaking on her return from a trip to the US where she had attended the Corporate Council on Africa’s Fourth US-Africa business summit held in Washington, DC, from June 24 to 27.

She was accompanied by a delegation of senior officials from the Department of Trade and Industry (DTI) and executives from small and medium-sized enterprises.

She confirmed yesterday that the US had decided to extend Agoa, which was initially designed to run until 2004, to 2008.

The unilaterally-declared piece of legislation offers preferential market access for African products into the world’s biggest economy, and has been particularly beneficial to African textile and clothing manufacturers.

Since its introduction, the US has emerged as sub-Saharan Africa's largest single-country export market, accounting for more than one-fifth of the region's total exports.

Hendricks said South Africa had also used the biennial event, which involves government and business leaders, to explain South Africa’s black economic empowerment (BEE) legislation as well as to advocate the need to extend Agoa beyond 2008 as well as extend third party provisions for least-developed countries.

She also met Assistant Trade Representative Florizelle Liser, who is the US chief negotiator on the US-Southern African Customs Union (Sacu) free trade agreement (FTA).

The FTA talks started earlier this year and are viewed by Sacu as a more permanent replacement for Agoa as it will be a bilaterally-agreed deal that cannot be withdrawn unilaterally.

“As well as trying to promote trade and investment between Africa and the US in the information technology, agro-industry and services sectors, I used this opportunity to promote the extension of Agoa and find out why government and business in the US didn’t take to the Act as expected,” she said, arguing that Agoa had not been exploited to its fullest extent.

“After discussions, it was clear that many of the delegates needed a nudge in the right direction,” she said, adding that the conference had been successful in clarifying why Agoa and US-Africa trade would benefit both territories.

Meanwhile, Hendricks reported that the BEE strategies had been well received and that there was a greater appreciation of the strategy from American business.

“The BEE strategy was well received by US delegates, as it’s a concept they know and identify with,” she said.