African Growth and Opportunity Act: A Vital Discussion in Washington
This week, the Biden-Harris administration’s foreign policy, economic, and trade teams are meeting with African counterparts to discuss the future of the African Growth and Opportunity Act (AGOA). The trade legislation, enacted in 2000, is set to expire in 2025, and its renewal is crucial for Africa’s economic growth and the United States’ global competitiveness.
AGOA has been instrumental in boosting African economies by waiving duties on most African goods entering the US market. Since its inception, the act has raised the living standards of millions of Africans, creating jobs and opportunities for American businesses. In fact, the Center for Global Development estimates that the annual expense in foregone tariffs is equivalent to a mere 3% of total US foreign assistance to Africa.
However, the act’s expiration in 2025 poses a significant threat to Africa’s growth and the US-Africa trade relationship. An increasingly powerful bloc of non-aligned countries is working to build a new international order that excludes the US, and letting AGOA expire would be a significant blow to American interests.
To address this, the US needs to adopt AGOA 2.0, which would encourage stepped-up investment, support the growth of African enterprises, and reinforce Africa’s ability to move forward with its own agenda. This includes ensuring the success of the African Continental Free Trade Agreement (AfCFTA), which aims to create a single African market and spur regional value chains.
Moreover, AGOA 2.0 must address the reality that Africa is critical to the transition to a carbon-free electric economy. The continent is home to nearly a third of the world’s required minerals, including cobalt, manganese, and natural graphite. The US currently imports over 50% of its critical minerals from China and relies heavily on Chinese processing, making it essential to diversify sources and components.
In conclusion, the AGOA Forum is a vital discussion that requires urgent attention. The US must prioritize Africa’s growth and development, not only for the continent’s benefit but also for its own economic and strategic interests. By adopting AGOA 2.0 and supporting the AfCFTA, the US can ensure a stronger trade relationship with Africa and promote a more sustainable and equitable global economy.
