TRALAC - Trade Law Centre

Should AGOA be expanded to include [more] agricultural products?

Sunday, 12 April 2015

Source: AFK Insider

Too many exports from too few countries in Africa to the U.S. are energy-related, says Udunopa B. Abalu, a graduate student and research assistant at George Washington University in the U.S.

The U.S. Congress should revise and renew the African Growth and Opportunity Act (AGOA) before it expires on Sept. 30, extending preferential market access to sub-Saharan Africa’s agricultural products—the backbone of the region, Abalu says.

A student of international trade and investment policy, Abalu focuses her research on African trade and economic development. She has experience doing research in Nigeria, Ghana and Ethiopia. 

 

Story by Udunopa B. Abalu: 


Total U.S. trade with sub-Saharan African countries decreased by 27 percent in the first quarter of 2014 compared to the same period in 2013—mainly because of falling oil prices and falling U.S. imports (mostly oil from Nigeria and Angola).

On the other hand, U.S. imports (mostly cocoa) from Côte d’Ivoire increased by 54 percent. Moreover, U.S. imports of cashew nuts for consumption increased by 35 percent from Benin and 13.2 percent Burkina Faso from 2013 to 2014.

AGOA can be enhanced if Congress allows provisions for African agricultural imports. Such imports should include cocoa (from countries like Côte d’Ivoire and Cameroon), tea and coffee (Ethiopia, Kenya and Uganda), cotton (Burkina Faso, Mali and Benin), rice (South Africa), palm nuts/oil (Cameroon and Nigeria), horticultural products (such as cut flowers from Ethiopia and Kenya), fish and fishery products (Ghana and Nigeria) and a wide spread of approved fresh and processed fruits and vegetables from various sub-Saharan countries. We can no longer ignore the potentials of these rising global economic giants.

Extending preferential access to agricultural products would not only increase export diversification but also encourage more African countries to maximize their ability to benefit under AGOA. Allowing agricultural provisions would allow AGOA to reach its highest potential.

Agriculture is Africa’s largest economic sector, representing 15 percent of the continent’s total gross domestic product. While faced with competing agricultural exports from Asia and South America, AGOA countries have comparative advantages in lower labor costs. As agricultural trade increases in Africa, so will jobs and income levels. AGOA countries would also be less likely to engage in political conflict as agricultural trade increases.

Increased economic growth in AGOA countries would benefit U.S. companies seeking to expand their businesses abroad. U.S. consumers would also benefit from having more access to low-priced agricultural imports. Even though U.S. agricultural producers might receive lower profit margins due to lowered prices from the increased competition, they would still enjoy domestic farm subsidy protection.

Still, some may argue that this policy will never be realized because of the politics surrounding U.S. farm subsidies.

Lobbying efforts would need to focus on those agricultural products that would not negatively impact competing U.S. domestic production. A special quota system should be implemented to allow market access for a set number of agricultural imports from AGOA countries.

Leaving out agriculture from AGOA would be equivalent to leaving out sub-Saharan Africa from growing global trade trends. But market access alone is not enough.

The U.S. should also engage African economic and trade associations such as the Economic Commission for West African States (ECOWAS) and the Southern African Development Community (SADC).

It could organize annual agricultural trade conferences for AGOA countries, focusing on issues such as trade facilitation, dealing with supply-side constraints, climate-change impacts on agriculture and food supply, strategic infrastructure investments, enhancing market competitiveness, and promoting awareness to African agricultural producers about AGOA.

These conferences could cost approximately $300,000 at least, but can be funded through corporate sponsorship or the Foreign Agricultural Services budget.

Extending preferential market access to agricultural products is Africa’s crucial path to economic growth—and for the U.S., a ripe fruit of abundant opportunities.