AGOA at Risk: 30 African Nations Face Trade Uncertainty

As the spectre of Donald Trump looms over the political landscape, the future of the African Growth and Opportunity Act (AGOA) hangs precariously in the balance. Since its inception in 2000, this pivotal trade agreement has bolstered African exports to the United States, sustaining entire sectors of African economies. Yet, with the American president yet to declare his intentions regarding AGOA, his sweeping customs offensive has cast a pall of uncertainty over its fate. With the agreement set to expire in September, the prospect of renewal appears increasingly elusive.

A Cornerstone of Trade Relations

AGOA has long been a cornerstone of commercial relations between the United States and African nations.

Introduced under the Democratic administration of Bill Clinton, this preferential trade treatment allows African countries to export a myriad of products to the United States duty-free, provided they adhere to a series of stipulations, including political pluralism, human rights respect, and anti-corruption measures.

Currently, around thirty of the fifty African nations benefit from this accord, which encompasses a diverse range of products from textiles to yams and automobiles.

In 2023, goods worth $9.26 billion were exported under AGOA, with $4.25 billion attributed to petroleum and energy products, according to the United States International Trade Commission (USITC).

In a State of Limbo

However, the recent announcement of blanket tariffs for all nations has plunged AGOA into a state of clinical uncertainty.

While Madagascar’s Minister of Commerce, representing the world’s leading vanilla producer, maintains that the agreement “continues to apply for now,” his South African counterpart has contradicted this assertion, stating through a spokesperson that the situation is anything but clear.

“The situation is confusing; there is no clarity,” summarises Alex Vines, Director of the Africa Programme at the Chatham House think tank.

The last renewal of AGOA occurred in 2015, and prior to Trump’s election, a bipartisan bill introduced in April 2024 sought to extend the agreement until 2041.

A Looming Threat

Should Donald Trump choose to dismantle AGOA, he possesses several avenues to do so. He could simply opt not to renew the agreement in September, or he might exclude specific countries, such as South Africa, which has drawn his ire.

“President Trump could invoke the clause of the agreement stipulating that the activities of beneficiaries must align with the security and foreign policy interests of the United States,” observes Richard Morrow, an analyst at the South African think tank Brenthurst Foundation.

Furthermore, he could exclude certain industrial sectors from the agreement, such as the automotive industry, which he has frequently cited as a barometer of the American economy.

The Automotive Sector at Risk

South Africa stands as the largest non-oil exporter under AGOA, with exports to the United States reaching $3.6 billion in 2023.

Under AGOA, Washington has exempted South African vehicles from tariffs, making this sector the second-largest export category to the U.S. after precious metals, totalling $1.88 billion, according to South African revenue authorities.

The non-renewal of AGOA would have catastrophic repercussions for this industry.

Billy Tom, President of the National Association of Automobile Manufacturers of South Africa (Naamsa), asserted that 86,000 jobs are directly tied to the agreement within manufacturers, with an additional 125,000 jobs linked to their suppliers.

“I do not believe South Africa stands a chance of securing a renewal of AGOA,” laments Neil Diamond, President of the South African Chamber of Commerce in the United States, who is disheartened by the anti-Pretoria rhetoric emanating from Trump and billionaire Elon Musk, a South African native and close associate of the president.

The United States has expressed particular concern over Pretoria’s recent expropriation law, deemed discriminatory against the white minority, as well as its foreign policy decisions, including a genocide complaint against Israel and its growing ties with Russia and China.

Textiles, Oil, and Agricultural Products

Following South Africa in the ranks of non-oil AGOA exporters are Kenya ($509 million), Madagascar ($339 million), and Lesotho ($167 million), all of which primarily export textiles to the United States under the agreement, according to the USITC.

Meanwhile, Nigeria emerges as the leading oil and energy exporter under AGOA, with exports amounting to $3.7 billion in 2023.

Other nations, such as Ghana, predominantly export agricultural products within the framework of this accord.

As the clock ticks down to the potential expiration of AGOA, the stakes have never been higher for African economies reliant on this vital trade agreement.

The uncertainty surrounding its future not only threatens the livelihoods of countless individuals but also casts a long shadow over the broader economic landscape of the continent.

Source: Le Mauricien