CRS Reports on AGOA, U.S. Trade Relationship with Sub-Saharan Africa

AGOA Established in 2000, but Trade Relationship Still Small & Unbalanced

In May 2000, Congress approved AGOA, which authorizes the President to designate Sub-Saharan African (SSA) countries meeting certain requirements as eligible to receive duty-free treatment for certain articles. Among the benefits, are duty-free and quota-free treatment for eligible textile and apparel articles in qualifying SSA countries.

However, the U.S. trade relationship with SSA countries remains small and unbalanced as shown by the following 2008 trade statistics:

• The U.S. imported $86.1 billion from the region, or 4.1% of its total imports, and exported $18 billion to the region, only 1.6% of global U.S. exports.
• Nearly all U.S. imports by value from the region were energy products (83%), which were almost exclusively petroleum (largely from Nigeria), or minerals and metals.
• 70% of U.S. imports from the region were from three SSA countries in (Nigeria - 44%, Angola - 22%, and South Africa - 12%). Exports were similarly concentrated, with three countries (South Africa, Nigeria, Angola) receiving 68% of U.S. exports.

Worry that Trade Preference Reform Legislation Could Erode AGOA Benefits

An emerging area of concern for SSA countries is growing interest in Congress over reforming trade preference programs by combining existing programs, some of which are due to expire at the end of 2010, into a unified package. Some have expressed concern that a preference program giving trade benefits similar to those enjoyed by AGOA countries, or creating one trade preference program for all developing countries, would lead to erosion of the preferences granted to African countries under AGOA, and place them in direct competition for U.S. market share and investment with other developing and least-developed countries.

(Trade preference reform continues to be a priority for the House Ways and Means and Senate Finance Committees; however, there does not yet appear to be a consensus as to the way that such programs should be reformed. Currently, trade preference reform efforts appear to be focused on providing additional benefits to Haiti. Reform of other trade preference programs (such as AGOA) would likely be addressed after work on Haiti has been completed.

See ITT’s Online Archives or 11/20/09 news, (Ref: 09112010), for BP summary of House-introduced legislation (H.R. 4101) to extend and modify GSP and AGOA and create a new trade preference program for least developed countries.)

More Should be Done to Diversify AGOA Exports

CRS states while textile and manufacturing industries make up a growing part of U.S. imports under AGOA, these imports are dwarfed by AGOA imports from the petroleum and mining sectors. CRS suggests that agriculture is an important source of income for African workers, and increasing agriculture exports under AGOA could help raise incomes and spur economic growth. Another area to target could be light manufactures, with improved capacity, infrastructure, and policies to encourage investment.

One Year Eligibility Periods Are Too Unpredictable

Critics cite the unpredictability of a country’s AGOA benefits from year to year as a source of investment risk, and have suggested minimum eligibility terms of greater than the current one year. CRS notes that several countries have lost or been considered candidates for losing AGOA eligibility at one time or another, including: Eritrea, the Central African Republic, Cote d’Ivoire, Guinea, Madagascar, Niger, Swaziland, Mauritania, and even Lesotho, which CRS states is considered an AGOA success story.

CRS report (dated 02/04/10) available at http://assets.opencrs.com/rpts/RL31772_20100204.pdf