Opinion
Congress should extend AGOA now
Minimizing Uncertainty | There is no question that the administration’s review of AGOA is timely and necessary. For one, the review will engage all stakeholders, including Congress, U.S. government agencies, the private sector and civil society organizations. The review will also tackle a range of important issues. For example, why have only an estimated 300 of the total product lines been utilized by AGOA beneficiaries? Should AGOA create investment incentives for U.S. companies to strengthen productivity and manufacturing in AGOA-eligible countries? What are the implications for AGOA if African countries move forward and sign the European Union’s Economic Partnership Agreements? For how long should AGOA be extended? These and
many other similar issues are in need of deliberate consideration.
Nevertheless, the results of this review can be addressed in separate pieces of legislation. For example, if the administration and Congress wanted to provide tax incentives to stimulate more investment in the region, this would presumably be done under tax legislation. If there was an interest in allowing more agricultural products into the U.S., the Farm Bill would again presumably be the vehicle.
AGOA was signed into law in 2000, at a time when there was negative economic growth in Africa, conflict was pervasive and there was little competition for the African market.
However, with 7 of the 10 fastest growing economies in the world today and the emergence of a consumer class on par with those found in China and India, there is no question that AGOA needs to become more relevant to the U.S.-African commercial relationship. Crucially, this increased relevance can be achieved without compounding the uncertainty and sense of risk that most American investors have when it comes to investing on the continent.
Extending AGOA in Early 2014 | Therefore, AGOA’s extension in its current form for five years should be included in other trade legislation, such as the Trans-Pacific Partnership agreement, that is likely to come before Congress early next year.
Extending AGOA as soon as possible would bolster U.S. commercial relations with the Africa. It would enable President Obama to use next year’s summit of African leaders to focus on a broad range of trade and investment issues, in particular the steps African governments need to take to more fully utilize AGOA, without having the extension issue be a distraction.
Finally, an extension would not prevent the administration from revising AGOA, as should occur. An extension now would be a clear signal that the U.S. is serious about being a long-term commercial partner to one of the world’s most dynamic regions.
