LETHABO SITHOLE: Agoa eligibility — navigating a complex framework of trade, politics and potential

Navigating the complex framework of trade, politics, and potential that is the African Growth and Opportunity Act (Agoa) can be a daunting task.

As the 20th Agoa Forum convenes in Johannesburg to discuss the future of the trade act, it is clear that Agoa remains a thought-provoking subject at the intersection of policy, trade and development. Since its inception in 2000 the act has transformed the economic development of sub-Saharan African countries.

As of this month 35 African countries were active Agoa beneficiaries. The eligibility requirements, detailed in Section 104 of the Agoa legislation (Public Law 106/200), shape the fortunes of nations and the trajectory of their trade relations.

The Agoa eligibility criteria encompass a broad spectrum of considerations: 

• Agoa demands that beneficiary countries maintain a market-based economy that safeguards private property rights, incorporates a rules-based trading system, and minimises government interference in economic matters. This involves measures such as eliminating price controls, subsidies and government ownership of economic assets.
• A fundamental pillar of Agoa eligibility is the demonstration of respect for the rule of law, political pluralism and the protection of essential rights, including due process, fair trial and equal protection under the law.
• Countries aspiring to benefit from Agoa must actively work towards eliminating barriers to US trade and investment. This encompasses providing national treatment, creating an environment conducive to domestic and foreign investment, protecting intellectual property rights and resolving bilateral trade and investment disputes.
• Agoa mandates the implementation of systems designed to combat corruption and bribery, fostering an environment of transparency and integrity.
• Eligible nations are expected to implement economic policies aimed at poverty reduction and improving access to healthcare and education.
• Respect for human rights and core labour standards is a non-negotiable condition. This includes the right of association, the right to organise and bargain collectively, a prohibition on the use of forced or compulsory labour, minimum age requirements for child labour, and acceptable conditions of work in terms of minimum wages, working hours and occupational safety and health.
• Beneficiary countries must not engage in activities that undermine US national security or foreign policy interests.

The dynamic nature of these eligibility requirements means a country’s status under Agoa can change over time. Periodic reviews ensure that nations continue to meet these criteria, and noncompliance may lead to withdrawal of Agoa benefits.

Qualifying for Agoa extends beyond meeting these country-specific criteria. It also involves ensuring that the products eligible for Agoa preferences adhere to the requirements of origin rules. These requirements are comprehensive and encompass a variety of products, from agricultural goods to textiles and apparel.

Careful documentation is essential to maintain compliance. While Agoa preferences include all products covered by the Generalised System of Preferences (GSP), there are also specific exclusions, such as automobiles and certain textiles and apparel.

Agoa’s annual determination of eligibility is a notable feature as it falls under the jurisdiction of the US president, highlighting the US’s ability to shape trade relationships with Agoa-eligible countries. However, the unpredictability of this process can be concerning for beneficiary nations as they lack a formal recourse to dispute settlement mechanisms regarding their Agoa status.

The fluctuating history of Agoa eligibility provides a captivating case study. Since its inception countries have been added and removed from the list due to political, economic and human rights considerations.

For instance, Zimbabwe has never been eligible. The recent decision by the Biden administration to remove Gabon, Niger, Uganda and the Central African Republic from Agoa is a testament to the trade tool’s power to influence foreign policy.

Agoa’s potential as a catalyst for economic development is disputed. While some see it as a pathway to progress, others believe it has fallen short. Utilisation of Agoa benefits is inconsistent among eligible countries, and many lack national strategies to maximise their potential, resulting in the programme being underutilised.

In 2021 a US government study revealed that over 80% of nonpetroleum exports under Agoa came from just five countries. The apparel industry has thrived under Agoa, but other sectors have not performed as well. Despite reaching its peak in 2008, US imports from Agoa beneficiaries only accounted for 1% of all imports in 2021.

To address the underutilisation of Agoa benefits in eligible countries a specialised and nuanced strategy is required. This should start with targeted awareness campaigns and the dissemination of detailed information and educational resources to governments, businesses and stakeholders. These campaigns should emphasise Agoa’s opportunities and compliance requirements to ensure maximum utilisation of the programme.

Advanced technical assistance should be provided to help build capacity and ensure compliance with trade regulations. Advocacy should also support policy and regulatory reforms that align with Agoa’s provisions. Notable progress has been made in this regard.

VentureLift Africa’s partnership with the US government’s Prosper Africa initiative is set to boost two-way trade and investment between African countries and the US. The primary objective is to implement the Agoa advisory training objectives of the continental services — trade preferences support programme.

This initiative aims to create a network of Agoa advisers who can support buyer-seller linkages and provide on-demand information on Agoa policies. These advisers cover all Agoa-eligible countries and the US.

Moreover, strategic public-private partnerships should be established, and networking facilitated between eligible countries. This should focus on advanced market research and product diversification to unlock the full export potential under Agoa.

Monitored and evaluated mechanisms should be employed, and financial access for trade and investment optimised. Advocacy efforts should be leveraged to influence the US’s Agoa-related policies. Long-term economic growth strategies should be developed and executed while encouraging regional integration for a sustainable impact.

Collaboration with specialised NGOs and international institutions is essential to augment the effectiveness of these bespoke strategies. A holistic and expert-driven approach is paramount to maximise Agoa’s advantages in eligible nations.

Efforts to bolster the effectiveness of Agoa have been aimed at expanding its scope to encompass emerging industries such as technology and digital services. While Agoa remains an essential tool for driving economic development and trade, its effectiveness is contingent on the adaptability of African nations and the US to respond to changing global conditions and strike a balance between political considerations and economic opportunities.

• Sithole is managing partner at Amila Africa, a legal practitioner and consultant in international business, trade & investment law.