EAC proposes flexible US market access under Agoa plan

Tuesday March 14 2023
EAC Secretary-General Peter Mathuki.

East African Community Secretary-General Peter Mathuki. EAC wants the US government to make the rules governing access to their market more flexible. PHOTO | EVANS HABIL | NMG


The East African Community (EAC) wants the US government to make the rules governing access to their market more flexible under the planned renewal of the African Growth Opportunity Act (Agoa).

The regional bloc, during its Council of Ministers Ordinary meeting held in February, made four new proposals to the Joe Biden administration to expand Agoa and make it more effective should the US Congress hasten its renewal before the 2025 expiry date.

The proposals come in the wake of plans by the American Chamber of Commerce Kenya (AmCham), a network of American and Kenyan businesses, to hold its third edition of the Business Summit on US-East Africa Trade and Investment in Nairobi later this month.

A report by the EAC Secretary-General Peter Mathuki to the council during its 43rd Ordinary Meeting has included four new proposals that would improve trade between the US and East Africa under Agoa.

Dr Mathuki, who participated in the US-Africa Leaders' Summit in Washington DC last December, said the EAC took the position by the African presidents that Agoa be extended for 10 years, to 2035.

US-Africa Leaders Summit

US President Joe Biden (C) with African leaders during a group photo session at the US-Africa Leaders Summit on December 15, 2022. PHOTO | KEVIN DIETSCH | GETTY IMAGES VIA AFP


“During the discussions, the African Heads of State and delegates agreed on the following positions: that the Agoa’s extension or renewable should be in place earlier in September 2023 rather than September 2024,” Dr Mathuki said in a report to the council.

“When extended, Agoa should retain all the existing beneficiaries. The facility should also remove the trade restrictions from African products that limit the use of Agoa at this moment,” he added.

Proposed measures

Agoa provides duty-free market access to the US for qualifying products produced in designated sub-Sahara African beneficiary countries.

It does this by extending duty-free preferences previously available under the US Generalized System of Preferences (GSP), while also adding many additional tariff lines that were not previously GSP-eligible.

Among the proposed measures that the EAC wants in place before the renewal includes expansion of the list of Agoa’s products to cover the agro-processing value chain.

“Four new measures to expand Agoa will make it more effective: expand the list of Agoa’s products to make it wider; expand beneficiary countries to include non-sub-Saharan African countries to ultimately cover the African Continental Free Trade Area (AfCFTA) countries,” said Dr Mathuki.

Currently, fewer than 40 sub-Saharan African countries are considered for eligibility.

The other EAC proposed measures include making the rules governing access to the market of US to be more flexible on Agoa products, as well as supporting Micro, Small and Medium Enterprises (MSMEs) such as youth and women-owned business as well boost US investment in Africa.”

The Council also wants the establishment of a Dialogue Forum on Trade and Investment Opportunities as well as the provision of support in building the technical capacities of countries exporting to the USA under Agoa.

While the eligibility requirements are set out in the US legislation, it is the Washington determines, annually, whether countries have met the published requirements. Beneficiary status may be granted, or withdrawn, at the discretion of the US president.

Read: Biden proposes to 'sweeten' Agoa benefits

All EAC partner states are eligible, except South Sudan, which was delisted in 2015.

On December 22, 2020, the Democratic Republic of Congo (DRC) was reinstated as an Agoa beneficiary.

At the same time, the DRC was also declared an eligible ‘lesser developed beneficiary sub-Saharan African country’ for purposes of textile preferences under the favourable third country fabric rules of origin.

At this time however, it had not yet met the apparel visa requirements.

“We understand there is quite a momentum created around the possibility that Agoa would be renewed. All is that it is a congressional mandate, and the US Congress will take a decision,” said Maxwell Okello, CEO American Chamber of Commerce in Kenya in an interview with The EastAfrican.

“This opportunity is for market access and for Kenya to preserve the benefits that Kenyan companies have been enjoying by exporting to the US under Agoa duty and tariff free and so our hope is that whatever that format of the next phase will be, that we don’t lose the advantage that we have had.”

kenya agoa

Textile workers in Athi River EPZ, one of the main Agoa beneficiaries in Kenya. PHOTO | ANTHONY KAMAU | NMG

Two-way trade

Okello said the third edition of the AmCham Business Summit, which will be held on March 29-30 in Nairobi, will provide a strategic platform for enhancing two-way trade and investment between the US and the East Africa region.

“Our vision is that strategic partnerships between governments and key stakeholders in the private sector will be strengthened at the summit. We look forward to exploring how we can leverage the dynamism in Africa’s economies to fast-track recovery and growth,” said Okello.

The summit will be the first high-level event on the continent following the US-Africa Leaders’ Summit. It is expected to explore opportunities to promote sustainable and inclusive growth while increasing US investment in the region.

Read: Yellen heads to Africa as US seeks closer ties

The US is the largest export destination of Kenya’s apparel, accounting for more than 90 percent of garment exports every year.