Thursday, May 13, 2010

AGOA: Ten Years Later

Ten years ago, Republicans and Democrats worked together across the political divide to pass the African Growth and Opportunity Act (AGOA) – the first major piece of legislation exclusively devoted to Africa and the first major trade legislation in several years at that time. Ten years ago, African diplomats abandoned their traditional aloof posture regarding legislation involving African affairs and reached out to Congress to approve AGOA. Ten years ago, corporations and non-governmental organizations worked in concert to see AGOA passed and implemented.

With all the collaboration AGOA engendered ten years ago and in years since then, one must ask, why hasn’t AGOA worked as we all hoped it would?

African exports to America have nearly tripled since AGOA was passed, and American exports to Africa have doubled. Looking solely at the numbers, one would say AGOA has succeeded. However, that would ignore the face that more than 90% of U.S.-Africa trade under AGOA involved the oil or mining sectors. That’s not success in the way it was intended. Members of Congress and their staffs (including me at the time) and all of us who have worked for AGOA’s success then and now meant for small and medium enterprises in Africa and America to benefit, which hasn’t happened to the extent intended.

The Office of the U.S. Trade Representative has made clear on numerous occasions that the U.S. government has done all it can to make AGOA work and that it is now up to Africans to take it further. They are partly, but not completely, right.

U.S. Trade Representative Ron Kirk told participants at last year’s AGOA Forum in Nairobi, Kenya, that the U.S. government has extended AGOA more than once and provides more than 6,500 items that Africans can export to America duty free. At the 10th anniversary celebration, he reiterated that “95% (of the tariff lines under AGOA) are not used.”

What Africans have said is that the extensions were all for relatively short periods, which our business people also have said does not provide the certainty they need for long-term, extensive investment. As for the number of items covered under AGOA, the U.S. government continues to focus on training their counterparts in Africa rather than the producers of goods. Like the overall trade statistics, the numbers would make you think we have devoted a lot of resources to capacity building, but in reality, much of that has been wasted like rain in the desert because we aren’t training the right people.

Congressman Dave Camp, Ranking Member of the House Ways and Means Committee emphasized this latter point: “The most generous preferences don’t matter if countries are unable to use them.”

Certainly, African governments could do a better job of working with their private sectors to identify and eliminate barriers to trade, but that isn’t happening to the extent it needs to happen. It must be said, though, that our capacity building efforts have not sufficiently targeted this disconnect between African public and private sectors. If it were so simple and easy for Africans to resolve these issues, they would have done so themselves already.

There are efforts to extend AGOA-like benefits in textiles and apparel to Asian countries such as Bangladesh and Sri Lanka, which already out-produce African countries. This would undermine current non-oil benefits for AGOA producers without enhancing sectors in which Africans could be more productive, especially agriculture. In the past 10 years, very little, if anything, has been done to successfully enhance U.S.-Africa agricultural trade. We are not much further on this than we were in 2000. Without a bustling agriculture trade sector, giving textile and apparel benefits to Asian countries will mean the non-oil, non-mining portion of AGOA will shrink further than it is now.

Watching the members of Congress gathered to celebrate the 10th anniversary of AGOA, it reminded me of the bipartisan campaign to make the legislation as comprehensive as possible without being so broad that it stymied Congressional action. In all the time I have covered Congress as a journalist, worked as a staff member or worked with Congressional offices on Africa issues, I have never seen as much across-the-aisle cooperation as I did during those days. Congressman Ed Royce said the effort to pass AGOA was the highlight of his career.

We will need another bipartisan campaign to figure out how to transition Africa for the time when business people on the continent have to focus on items other than textile and apparel. In the trade preference reform process, we need cooperation and understanding. This is about helping people in developing countries to create wealth and move away from dependence on foreign aid. AGOA can help do that if the right changes are made. For that to be done, the bipartisan Congressional coalition that passed AGOA must be reconstructed.

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