New Agoa rule on eligibility and suspension starts to apply
Saturday January 23 2016
Countries qualifying for duty-free access to US markets under the Africa Growth and Opportunity Act (Agoa) must adhere to US trade regulations as well as its foreign policy.
This is a new rule enacted by the US Congress last year after the renewal of the US–Africa trade partnership for another 10 years.
According to EAC Director General of Customs and Trade Peter Kiguta, under the new rule, a country that goes against any of these requirements is suspended from Agoa for a period to be determined by the US government.
“The eligibility criteria will worsen with time because US trade representatives are expected to report on the eligibility of individual country every year and if found ineligible, a country’s goods will not have access to the US market,” said Mr Kiguta.
Last week, the US and South Africa reached an agreement on importation of American pork shoulder cuts and beef. In November, the two had reached yet another agreement on poultry products.
READ: Fresh Agoa hurdle for South Africa as Obama says to suspend deal
South Africa is the second country to face suspension after Burundi under the new rule.
Last year October, President Barack Obama announced that Burundi would be ejected from Agoa in January for its “continuing crackdown on opposition members, which has included assassinations, extra-judicial killings, arbitrary arrests, and torture.”
African countries’ agricultural produce enjoy a zero-tariff rate for about 6,800 product line through Agoa without any reciprocity required for US goods.
“For African countries to expand their trade partnership with the US market, we need to negotiate a preferential trade agreement like that with the European Union for reciprocal trade,” said Mr Kiguta.
READ: EAC partner states look to benefit from more trade deals with the US
“The challenge with Agoa is that it is unilateral; it can be withdrawn any time and the 10-year period is very short and limiting for trade. So we need to have a long-term trade partnership that is more predictable.”
With a preferential trade partnership like the EAC-EU Economic Partnership Agreement, Africa will be protected from undue competition while producers of the most sensitive goods — mainly agricultural goods — will enjoy protection from competition with US imports.
The main agricultural exports to the US are cocoa paste and powder, citrus fruits, edible nuts, wine, unmanufactured tobacco, horticultural products and vegetables.
Under Agoa, the US retains various trade barriers and high tariffs on goods such as sugar and cotton.
Sugar, meat, dairy, vegetables, processed fruit and other processed goods such as dried garlic, apricots, shea butter, yoghurt, ghee, cashew nuts, sugarcane products, sugar-containing cocoa products, oil seeds, shrimp and prawns, bananas and mangoes face trade barriers in US markets.