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Friday, November 27, 2020

Envisioning a post-AGOA relationship

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Despite the Trump administration’s apparent support for AGOA, it is important to begin exploring the structure of a post-AGOA relationship. As African countries enter into reciprocal relationships with other countries, especially the EU, U.S. companies and goods will compete at an increasing commercial disadvantage. This growing commercial disadvantage, inevitably, will pressure Congress to act to protect U.S. companies entering African markets, straining the current strong bipartisan consensus in support of AGOA.

 

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In order to ensure an enduring and mutually beneficial trade relationship, the U.S. and the African Union should create a high-level panel to develop a framework and a path forward to a more reciprocal framework when AGOA expires in 2025. This panel, ideally chaired by Ambassador Lighthizer and AU Trade Commissioner Fatima Haram Acyl, should solicit a range of opinions and perspectives, including from academia, think tanks, private sector representatives, and members of civil society. A progress report on their deliberations would be an important part of the next AGOA Forum.

 

There are a number of reasons for beginning to plan for the transition to a reciprocal U.S.-African trade relationship. Africa has committed to creating a Comprehensive Free Trade Agreement by the end of 2017, and three regional economic communities—SADC, EAC, and COMESA—have already formed the Tripartite Free Trade area. Africa’s progress on regional integration needs to be reflected in any new trade relationship with the U.S. to ensure that it is mutually beneficial supportive of the region’s integration efforts.

 

In addition, the European Union is currently negotiating Economic Partnership Agreements (EPAs) with 41 African countries through different blocs. Some EPAs have been have been signed and are now in force while some are still being negotiated. As the 2017 National Trade Estimate Report on Foreign Trade Barriers points out, “The EU-SADC EPA will further erode U.S. export competitiveness in South Africa and the region due to the greater disparities in tariff levels that U.S. exports will face under the EPA.” As the other EPAs take hold across the continent, the disparities adversely affecting American companies will intensify. And, of course, China, as Africa’s largest trading partner, adds to the pressures on U.S. commercial competitiveness in Africa. A new trade relationship between the U.S. and African nations would codify measures related to market access that would provide American companies with more certainty, which would be helpful in competing with Chinese companies.

 

From the U.S. side, Congress will have to develop a structure for a trade agreement that takes into account Africa’s development priorities. At the same time, market access for goods and services, government procurement, and dispute resolution mechanisms, among other issues, will need to be consistent with those arrangements that Africa’s other trade partners enjoy.

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