AGOA Advocates Urge Immediate Renewal as Debate Over Reciprocity Continues

A June 2013 report by The Wilson Center and Manchester Trade said conditions were “ripe for what can be the perfect storm for AGOA enhancement,” following U.S. Trade Representative Mike Froman’s appointment (See Ref:[13062611]). “The stars are aligned for to make sure that AGOA moves from its current state of just trade preferences,” said Dennis Matanda, Head of Government Relations at Manchester Trade and Africa Expert at The Wilson Center. Stephen Lande, President of Manchester Trade and co-author of the June report, said this would also give the USTR enough time to implement recommended changes like making duty-free treatment permanent or phasing in reciprocity.

Recommendations by Lande and Matanda to make AGOA reciprocal are in response to competition with Europe and China in Africa. “American exports are suffering, and China is really kicking America’s butt in Africa,” Matanda said, “And if Africans are going to be in this great relationship with the EU, why do we have to struggle?”

While there have been serious talks about extending AGOA for 10 to 20 years, not everyone agrees that duty-free provisions of AGOA should be reciprocal. Paul Ryberg, President of the African Coalition for Trade, strongly disagreed with Lande’s recommendation for permanent duty-free treatment of the African nations. African countries would be less eager to form free trade agreements (FTA) with the U.S. if they had permanent duty-free treatment under AGOA, he said.

Ryberg notes that the USTR had already tried “once, and only once” to establish FTAs with the Southern African Customs Union. “There are already other African countries willing to negotiate FTAs, but smaller markets are not as interesting to USTR,” Ryberg said. Ryberg added that the USTR’s interest in reciprocal agreements with South Africa could be attributed to South Africa’s establishment of a FTA with the European Union nearly a decade ago. Duty preferences for European goods in South Africa were “just now kicking in” from this FTA, placing American companies at a disadvantage, Ryberg said. As a result, people started asking why the U.S. should allow South Africa’s goods to come in duty-free when domestic companies are placed at a disadvantage “vis-à-vis their European counterparts,” Froman said during a press gaggle he participated in with Press Secretary Jay Carney on July 1.

Manchester Trade’s June report also recommended adding more agricultural products like tobacco, sugar and ground nuts under AGOA trade preferences. But Ryberg said that adding these products could backfire by further delaying AGOA renewal. Ryberg referred to the 2012 renewal of AGOA’s Third-Country Fabric Provision, which was “uncontroversial” yet took two full years of work and was renewed less than 30 days prior to its expiration. “If you had duty-free imports for products that are under quota in the U.S., you automatically attract opposition from domestic industry for that particular product,” Ryberg said. “Renewal will take even longer with controversial elements.”

Despite dissent over recommended changes for AGOA, industry agrees that work towards its renewal needs to begin as soon as possible. “Everybody agrees that AGOA has to be renewed no later than the end of next year or by the time Congress resets next October,” Lande said.

Ryberg said there is “a lot of talk among stakeholders” but currently “no serious consideration” within Congress for AGOA’s early renewal. The House Ways and Means and Senate Finance Committees didn't comment. But Froman has already “committed to launching a consultative process in partnership with Congress” on what the next steps for AGOA should be at August’s AGOA Ministerial in Addis Ababa, Ethiopia.-- Claire Yan