US assures Africa Agoa pact is here to stay

Wednesday August 16 2017

Workers at an EPZ textile factory. PHOTO | FILE

A factory for apparel for export to the US under Agoa at an export processing zone. PHOTO | FILE | NMG 

By NJIRAINI MUCHIRA
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The United States is determined to deepen trade with sub-Sahara Africa following assurances that the African Growth and Opportunity Act (Agoa) deal is safe under the Trump administration.

While a dark cloud has been hanging over Agoa since Donald Trump became US president over six months ago, a top US trade representative has assured African countries that the US is committed to a stronger and more sustainable relationship with Africa through free, fair and reciprocal trade.

Soon after taking over, Trump sent shockwaves across Africa when he said that Agoa was benefiting corrupt regimes because most imports under the trade pact are petroleum products.

But speaking in Togo during the 1st annual Agoa Forum this week, US Trade Representative Robert Lighthizer said the US is determined to achieve deeper commercial trade engagement with Africa.

“The United States is committed to Africa. We see great potential to grow and deepen our trade relationship, with the goal of establishing a true partnership for the future,” he said.

He added that the US and sub-Sahara Africa can create a better business environment and chart a path toward a stronger and more sustainable trade relationship for the future.

“So let us focus on ways we can achieve deeper commercial engagement now while working towards greater reciprocity in the future to ensure that sustained political support for our trade relationship goes forward,” said Mr Lighthizer.

He added that by lowering barriers and tackling other constraints that impede trade and investment, US-Africa trade is bound to flourish.

The assurance by Mr Lighthizer that Agoa is safe is bound to settle nerves in Africa going by the fact that the Trump administration’s move to put the interests of the US first, has created uncertainty as far as world trade is concerned.

Trans Pacific Partnership

So far, the US has withdrawn from the Trans Pacific Partnership while the future of the North American Free Trade Agreement (Nafta) remains in the balance since Trump threatened to renegotiate several bilateral free trade agreements.

But Mr Lighthizer’s assurance is also coming at a time when East African countries are embroiled in trade disputes with the US over the importation of second hand clothes known as mitumba.

While East African Community member states had agreed to ban mitumba importation by 2019, Kenya reneged on the agreement to safeguard its privileged access to the US market.

Tanzania, Uganda and Rwanda however maintained the import ban to protect their textile industries.

A report by Geneva-based trade lobby group CUTS International contends that mitumba importation has grown into a multimillion dollar industry that generally has a negative impact on the textile and leather industry of EAC countries.

“There is a negative relationship between a recipient country’s textile production and textiles imports, with a one per cent increase in second hand clothes imports resulting in a 0.61 per cent reduction in apparel production,” says the report.

The Togo forum, which is being held under the theme, The United States and Africa: Partnering for prosperity through trade, is seeking to promote stronger economic ties between the US and sub-Saharan African countries that receive enhanced market access under Agoa.

Enacted in 2000, the act allows 39 eligible sub-Saharan Africa countries to export certain goods to the US market duty-free. It was renewed in September 2015 and will expire in 2025.