Trade under AGOA continues to expand.

• Author: Legesse, Selamawit
• Position: INTERNATIONAL TRADE DEVELOPMENTS - African Growth and Opportunity Act

On May 18, 2000, President Bill Clinton signed the African Growth and Opportunity Act (AGOA) into law. Subsequently, on August 6, 2002, President George W. Bush signed the Trade Act of 2002, modifying the AGOA legislation and providing expanded preferential access for imports from Sub-Saharan Africa (SSA) beneficiary countries. These modifications are collectively referred to as AGOA II. This article discusses AGOA, its subsequent modifications, and U.S. trade with SSA beneficiary countries.

AGOA and U.S.-Sub-Saharan Africa Trade

While the Generalized System of Preferences (GSP) offers duty-free treatment for approximately 4,600 items from developing countries, the African Growth and Opportunity Act (AGOA) expands the number of eligible duty-free items to 6,400 items for eligible Sub-Saharan Africa (SSA) countries. Moreover, while the GSP program expires in 2006, AGOA does not expire until 2008, thereby extending duty-free treatment for SSA beneficiary countries. (2) AGOA provides both tangible and intangible Benefits-in particular, increasing direct trade between the United States and Sub-Saharan Africa. Further, the Act encourages interregional trade among the African countries, (3) provides incentives for accelerated trade reforms, (4) and facilitates economic dialogue between U.S. and African government officials. (5)

In 2003, U.S. exports to SSA reached $6.7 billion. This represented a 13.1 percent increase from 2002 and approximately 1 percent of U.S. merchandise exports worldwide. The leading U.S. export markets in SSA were South Africa (40 percent of U.S. exports to SSA), Nigeria (15 percent), Angola (7 percent), Ethiopia (6 percent), Equatorial Guinea (5 percent), and Ghana (5 percent). Major export items included oil and gas exploration machinery, wheat and meslin, aircraft and parts, motor vehicles, computer parts and accessories, and worn clothing. U.S. exports to Ethiopia, Equatorial Guinea, and Eritrea increased by 578 percent, 212 percent, and 203 percent, respectively. U.S. imports from SSA during 2003 reached $25.5 billion, about 2 percent of U.S. merchandise imports worldwide, an increase of 40 percent from the $18.2 billion reached during 2002. The leading SSA import sources were Nigeria (40 percent), South Africa (20 percent), Angola (17 percent), and Gabon (8 percent).

AGOA helped spur increases in imports from Sub-Saharan Africa. In 2003, AGOA imports (including GSP) totaled more than $14 billion, accounting for more than half of total U.S. imports from the region. The top four import items from the SSA region under AGOA were petroleum oil, passenger motor vehicles, sweaters, and suits. Although energy-related products continued to dominate U.S. imports from SSA, imports of textiles and apparel items, as well as transportation equipment have increased significantly due to AGOA (table 1). Nonoil AGOA imports totaled $2.9 billion, an increase of 32 percent from 2002. Leading non-oil import items under AGOA are presented in table 2. (6) The top six AGOA beneficiaries were Nigeria, South Africa, Gabon, Cote d'Ivoire, Congo (ROC), and Lesotho. AGOA imports from Namibia, Congo (ROC), and Nigeria increased by 2,623 percent; 220 percent; and 73 percent. Figure 1 shows the growth in U.S.-SSA trade during the 1999-2003 period.

Beyond increasing trade between the United States and Sub-Saharan Africa, AGOA also facilitates annual contact between senior-level officials of the United States and Sub-Saharan Africa governments. A yearly United States-Sub-Saharan Africa Trade and Economic Cooperation Forum (known as the AGOA Forum) is mandated by both the AGOA and AGOA II legislation. (7) The Act requires the United States Trade Representative, Secretary of State, Secretary of Commerce, and Secretary of the Treasury to host meetings with senior-level officials from governments whose countries are eligible for AGOA. The President is required, if possible, to attend the Forum every other year. Thus, AGOA establishes an institutionalized economic dialogue between U.S. and African officials, similar to the dialogue that the U.S. maintains with other regions of the world, for example, the Summit of Americas and the Asia-Pacific Economic Cooperation forum. The first AGOA Forum took place in Washington DC October 29-30, 2001. The second Forum was held in Mauritius from January 15 to 17, 2003, and the third...