TRALAC - Trade Law Centre

US-African Trade Increased 115 Percent Since AGOA's Enactment

Friday, 19 May 2006

Source: United States Department of State (Washington, DC

Two-way trade between the United States and sub-Saharan Africa increased 115 percent since the launch in 2000 of the African Growth and Opportunity Act (AGOA), according to a report submitted to the United States Congress May 18. (Download the report here.

The annual report, called the 2006 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act, describes the wide array of U.S. programs that are assisting African countries to bolster economic growth and development through trade. It provides an overview of the U.S. trade and investment relationship with sub-Saharan African countries, describes trade-capacity building and other technical assistance programs undertaken in support of AGOA objectives, and summarizes developments in sub-Saharan African countries related to AGOA's eligibility criteria.

"AGOA helps Africans use the power of trade to grow their economies and reduce poverty," U.S. Trade Representative (USTR) Rob Portman said in a statement issued with the report. "It also supports the efforts of those African countries undertaking difficult economic and political reforms. As these countries open their economies and increase their capacity to trade, opportunities are also arising for American exports to Africa."

Under AGOA, eligible countries receive duty-free access to the U.S. market for most of their products, a measure that offers tangible incentives for African countries to continue efforts to open their economies and build free markets. The original act has been amended twice.

"The United States," Portman added, "recognizes how aid for trade helps developing countries participate more fully in the global trading system. That's why we committed $199 million to trade capacity building activities in sub-Saharan Africa last year."

In Washington June 6 and June 7, more than 35 African trade and finance ministers, as well as leaders from the private sector and civil society, are expected to attend the fifth AGOA Forum, which will focus on helping African nations develop real growth in gross domestic product through trade expansion into U.S. markets. (See related article.)

According to a May 18 USTR press release, highlights of the 2006 report include:

Thirty-seven of the 48 sub-Saharan African countries are eligible for benefits under AGOA, which provides them duty-free access to the U.S. market for virtually all products.

As of April 2006, 25 sub-Saharan African countries are eligible to receive AGOA's apparel benefits and 14 of them also qualify for AGOA's provisions for hand-loomed and handmade articles.

Since its inception in 2000, AGOA has helped increase U.S. two-way trade with sub-Saharan Africa by 115 percent and U.S. total exports to sub-Saharan Africa rose 22 percent in 2005 from 2004, to $10.3 billion, while U.S. total imports from sub-Saharan Africa increased in the same period by 40 percent to $50.3 billion.

U.S. imports from sub-Saharan African countries under AGOA totaled $38.1 billion in 2005, up 44 percent over 2004 - largely due to oil; several non-oil sectors experienced increases, including footwear, toys, sportswear, fruits, nuts and cut flowers.

The United States was a leading provider of foreign direct investment to Africa, with the U.S. direct investment position rising 23.4 percent at the end of 2004 from 2003, to $13.5 billion.

In April 2006, the United States and Southern African Customs Union agreed to establish a framework that would form the basis for pursuing a free-trade agreement, develop a joint work program to address a broad range of FTA and other related issues, and seek to conclude concrete trade- and investment-enhancing agreements.

At the fourth annual meeting of the U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, held in Senegal in July 2005, President Bush announced a new Presidential Initiative - the African Global Competitiveness Initiative - providing $200 million in funding over five years to support expanded African trade and improved African export competitiveness.