Opinion
The Lande Opus On A Transformational AGOA
In short, while much effort will be expended on TPA, TPP and TTIP, AGOA could, perhaps, have the most lasting impact on global economic development – receiving much greater bipartisan support than any of these other initiatives.
A Transformational AGOA
Knowing that AGOA enhancement is a congressional markup process that will lead to a focus on a speedy passage through Congress, Ethiopia’s Minister of Trade who, as immediate past chair of the African Union’s Africa Trade Ministers’ Consultative Forum, urged that the timely renewal of AGOA not be bogged down in too much detail.
The most promising areas for AGOA Enhancement are the 4 areas identified by Ambassador Froman and the AGOA 2.0. white paper, which are duration of the program, origin rules, product coverage and eligibility requirements and review), as well as 2 steps that Africans can take to ensure that they leverage AGOA preferences and create a level playing field for U.S. exporters.
1. Product Coverage
Having already addressed the need for a longer period for AGOA renewal, we now address Priority 2. Although AGOA already provides duty-free access for 97.5 percent of all tariff lines for virtually all AGOA beneficiaries, there are still 316 tariff lines – mostly in agriculture, that are not currently included.
Here, sub-Saharan Africa has focused much attention on product coverage because designating exports in which they are competitive but subject to the high duty tranche of tariff rate quotas (TRQs) could be the key to getting a more effective AGOA. At the opening ceremony of the 2014 AGOA Forum, the African Union Commission’s Deputy Chairperson Erastus Mwencha specifically advocated for leaf tobacco, peanuts, and sweetened cocoa, amongst other commodities.
Studies show that with the exception of a commodity like sugar, designation all of Africa’s agricultural commodities will not affect U.S. producers or reduce American jobs. Also a number of agriculture products only attract duties if one adds sugar or dairy products during processing and unfortunately, these duties are often prohibitive. This promotes rural development in ways that do not threaten U.S. agriculture.
2. Updated Rules of Origin
While recognizing that AGOA has the most flexible origin rules of any preference program or free trade agreement, Ambassador Froman has suggested that the limits on the ‘cumulation’ of labor costs across AGOA countries be lifted to better promote regional integration. There’s also a suggestion that the current cap on the use of U.S. inputs in meeting the requisite ‘regional value content’ rules be eliminated since it has a marginal impact on promoting Africa’s participation in value chains.
