Opinion
Congress should extend AGOA now
Editor’s Note:
Dr. Schneidman’s article was published both on the Brookings Institution
website and also at www.agoa.info. But what should be most instructive is how the author fuses pragmatism with an overall hope for an enhanced AGOA – an AGOA that can actually help President Obama achieve a more sizable legacy in sub Saharan Africa – benefitting U.S. based businesses in the process, and actually
improving living standards on the continent.
Over 3 years ago at the AGOA forum in Zambia, then-U.S. Secretary of State Hillary Clinton committed the Obama administration to a seamless renewal of African Growth and Opportunity Act (AGOA) , the cornerstone of the U.S. – African commercial relationship. However, AGOA’s extension has become needlessly protracted and increasingly uncertain, notwithstanding the current political dysfunction in Washington. To ensure that AGOA does not expire on September 31, 2015, as currently scheduled, the administration and Congress should work together to extend the legislation as soon as possible, in its current form, for another 5 years, until 2020.
Complicating Factors | Before submitting to Congress legislation that would extend the act, the administration plans to undertake a full review of AGOA’s strengths and weaknesses. The idea is that the review would be completed in time for discussion at the summit of African leaders in 2014, which President Obama announced during his trip to Africa in June-July 2013. Following the summit, revised AGOA legislation would be sent to Congress. Unfortunately, the Congressional calendar does not work in favor of the administration in its mission to extend AGOA.
For one, it is unlikely that Congress will act on what presumably will be a significantly revised piece of trade legislation in its 2014 fall session. After all, it took Congress more than a year to extend AGOA’s third country fabric provision in 2012, a provision that had already been extended twice. While the provision was eventually extended, it happened at the 11th hour, leading to the cancellation of contracts and job loss in AGOA-eligible countries.
More probable is that the debate over extending AGOA will slip into 2015. At best under this scenario, AGOA’s extension will be yet another cliffhanger, creating uncertainty about U.S. commitment to the African continent and strengthening the commercial advantage of America’s competitors, especially Chinese companies that are rapidly establishing their market share in Africa.
The prospective renewal of the Generalized System of Preferences (GSP), which expired next July, further complicates AGOA’s extension. Nearly 5,000 of the 6,800 product lines that AGOA allows into the U.S. duty free and quota free are “scored,” or credited to GSP. This keeps AGOA’s cost to the American taxpayer relatively low, at about US$300-400 million annually.
The cost of AGOA would nearly triple if renewed before GSP. Even so, AGOA would remain one of the most cost-effective economic development programs ever initiated by the United States.
