AGOA Expiration Threatens 25% Drop in African Exports to U.S.

The expiration of the African Growth and Opportunity Act (AGOA) at the end of September has raised concerns among African officials and business leaders. AGOA, which has been in effect since 2000, provides duty-free and quota-free access to the U.S. market for thousands of products from 32 eligible African countries. In return, beneficiary countries must adhere to specific eligibility requirements, including maintaining a market-oriented economy, promoting good governance, and removing barriers to U.S. investment and trade.

AGOA has played a crucial role in boosting African exports to the U.S., attracting investment, and creating jobs. According to a study, U.S. imports from AGOA beneficiary countries grew significantly between 2001 and 2021. South Africa, the most industrialized economy in Africa, has been the biggest beneficiary of AGOA. Other countries, such as Kenya, have diversified their export structures by focusing on manufactured goods like apparel, reducing their dependence on primary commodities.

The U.S. Trade Representative's Office has stated that AGOA has driven economic growth in Africa and supported economic and governance reforms. For many African economies facing dollar shortages and struggling to meet international obligations, the export revenue generated by AGOA is a crucial source of hard currency.

However, the future of AGOA is uncertain. The U.S. government has not yet commented on whether it will renew the agreement. The current administration has prioritized bilateral dialogues and agreements over multilateral trade pacts, and AGOA renewal is not a top priority. African countries, which have limited influence over the terms of AGOA, are struggling to form a unified negotiating position. Kenya, for instance, has been in talks with the U.S. since 2020 and is seeking a new agreement by the end of the year to protect its key market. South Africa, facing a 30% tariff on its exports to the U.S., is also in negotiations to secure this important market.

If AGOA expires without renewal, thousands of African products could lose their duty-free access to the U.S. market, leading to a decline in African exports to the U.S., reduced investment, and job losses. A preliminary study suggests that African exports to the U.S. could decrease by about a quarter, impacting 1% of Africa's total global exports. The African Development Bank has already downgraded its growth forecast for Africa, citing trade and tariff volatility as one of the reasons. Kenya's trade minister has warned that the termination of AGOA could put 300,000 direct and indirect jobs in the country's textile and apparel sector at risk. Analysts estimate that South Africa could lose tens of thousands of jobs, exacerbating its already high unemployment rate.

The U.S. Chamber of Commerce has urged Congress to act quickly to renew AGOA, warning that the uncertainty surrounding its expiration is already affecting U.S. businesses and that its termination could harm U.S. geopolitical interests. The expiration of AGOA could have significant implications for African economies, which have come to rely on the agreement for market access, investment, and job creation. As the deadline approaches, African countries are hoping for a positive outcome that will allow them to continue benefiting from this important trade agreement.