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World Business: A New Era For US - Africa Trade Relations

The 17th African Growth and Opportunity Act (AGOA) forum which is to run from July 9 to 12, 2018 in Washington has been perceived by observers to be a turning point for US- Africa trade relations

The African Growth and Opportunity Act (AGOA) passed in 2000 and extended three years ago to 2025 could be a turning point in U.S-African commercial relations. AGOA had abolished import duties on more than 1,800 products manufactured in eligible countries in sub-Saharan Africa and another 5,000 products are eligible for duty-free access under the Generalized System of Preferences program. As of June 2018, 40 African countries are AGOA-eligible. Africa’s trade ministers coming to Washington from July 9, are riding with the momentum of having adopted the African Continental Free Trade Agreement (AfCFTA) in March. Once fully implemented, the AfCFTA, as it is known, requires members to remove tariffs on 90 percent of goods and to allow free access to goods, services, and commodities. The AfCFTA is central to the acceleration of regional integration and economic development across the region. While Africa is forging new trade relations internally, the Trump administration has a new proposal for future U.S.-Africa trade relations, and wants to establish “a free trade agreement that could serve as a model for developing countries.” Kenya, Côte d’Ivoire, and Ghana are under consideration as partners for developing the first model according to sources in the Trump administration. The question for this AGOA Forum is whether it can forge a common vision between Trump administration officials and Africa’s trade ministers on how to structure a post AGOA trade relationship. Specifically, can Africa’s continental free trade ambitions, embedded in the AfCFTA, be harmonized with the Trump administration’s model free trade agreement based on a single country? The AfCFTA should be the ideal tool to foster U.S-Africa commercial relations, with an agreement between Africa at the continental level and the United States. American corporations benefit from a continental approach versus a country specific one. In fact, by 2030, Africa will be home to 1.7 billion people and 6.7 trillion dollars, about (FCFA 3,725.2 trillion) of combined customer and business spending. The AfCFTA presents the opportunity for a single point of entry, reduced cost of doing business, economies of scale, lower tariffs, and increased commercial transaction which could contribute to job creation in the U.S. However, the AfCFTA still has to come into force, and some African countries, including economic powerhouses like Nigeria, have not yet joined the initiative. It is therefore critical for the African Union to adopt a more proactive strategy for its relations with the U.S. and propose an attractive continental partnership to the U.S. to advance mutual interests.

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