TRALAC - Trade Law Centre

Africa: Problems And Solutions On the AGOA Agenda in Dakar

Poor infrastructure and a serious lack of investment continue to hamper African businesses trying to crack the lucrative US market, a senior United States official told IRIN on Tuesday.

African trade experts are meeting with their US counterparts in Senegal this week in an attempt to get more out of the much-touted Africa Growth and Recovery Act (AGOA) enacted by the US Congress in 2000. AGOA is essentially a preferential trade programme covering nearly 6,500 products, from apparel to automobiles, which can be exported duty-free from Africa to the US until 2015.

Olivier Carduner, director of the US Agency for International Development in Senegal, pointed out that African exports to the United States under AGOA totalled $26.6 billion in 2004, an increase of 88 percent from 2003.

While petroleum, particularly from Nigeria and Chad, accounted for the bulk of exports to the US, non-oil AGOA exports, which include agricultural goods, totalled $3.5 billion, an increase of 22 percent over 2003, Carduner noted.

He said delegates attending the 2005 AGOA Forum, an annual gathering that brings together ministerial-level government officials from the United States and the 37 sub-Saharan African countries eligible for AGOA trade benefits, would tackle some of the impediments in economic sectors with the greatest potential for export growth.

"Despite the obvious progress that has been made, there are still some outstanding constraints, such as the lack of infrastructure to facilitate exporting. This is basically about poor roads and rail links, which means producers cannot get their goods to the export-processing facilities. But some countries at the meeting have also called for greater access to credit to firms who wish to scale up their operations," Carduner commented.

He acknowledged that Africa's textile industry, arguably the chief AGOA beneficiary, had been hard hit after a World Trade Organisation textile quota system on Asian producers expired at the end of 2004, closing factories and making thousands of workers redundant.

"African countries must work to diversify the export base - some countries are highly dependent on a single export product and when international prices drop, these countries cannot compete. What is needed is greater emphasis on value-added products that can fetch higher prices on the international market," Carduner suggested.

However, civil society groups said not enough was being done to bring more countries into the AGOA programme, and the US could do more to help Africa overcome trade barriers.

"The AGOA framework, as it stands, provides no guarantees that Africa as a whole will benefit from the process," Fred Oladeinde, chairperson of the civil society forum at the Dakar meeting said.

"We are here to encourage the US to open its doors to make all African countries eligible, and put in place mechanisms which would make it easier for poor countries to boost their trading relations. Civil society has an active role in assessing just how this relationship works."

Eligibility for AGOA is largely based on progress made in achieving political pluralism and establishing the rule of law. It also calls for the elimination of barriers to US trade and investment.