The AGOA as stepping stone for USA–Africa free trade agreements
| Pages | 115-131 |
| DOI | https://doi.org/10.1108/JITLP-03-2018-0014 |
| Published date | 11 October 2018 |
| Date | 11 October 2018 |
| Author | Regis Simo |
| Subject Matter | Economics,International economics,International business law,Strategy |
The AGOA as stepping stone for
USA–Africa free trade agreements
Regis Simo
Mandela Institute, Oliver Schreiner School of Law,
University of the Witwatersrand, Johannesburg, South Africa
Abstract
Purpose –The purpose of this paper is to show how the pattern of trade relationsbetween the USA and
African countriesis gradually shifting toward reciprocity. It thereforedemonstrates that the African Growth
and OpportunityAct (AGOA) was conceived to be a building block towardfuture bilateral trade agreements.
Design/methodology/approach –This paper adopts a historicalapproach to the USA’s policy toward
Africa in general and in trade mattersin particular. It critically reviews the chronology of US involvementin
the continent.
Findings –Although it was designed as a preferential tradearrangement, AGOA was intended to evolve
into reciprocal trade agreements.This is what the USA started doing even prior to the entry into force of the
AGOA, by entering intoTrade and Investment Framework Agreements with individualcountries or blocs. It
also transpires thatthe deployment comes as a response to the European Union whichis already engaged in
the redefinitionof its own trade relations with Africa since 2004.
Originality/value –The paper is important in many respects.Not only it is a study of the US practice as
preference-granting country, but it is also interested in the typology of trade agreements concluded by the
USA in other regions of the world.This is important to indicate and analyze the types of provisions African
countriesshould be expected to face when the time of entering into reciprocalbinding trade treaties arrives.
Keywords AGOA, African countries, Free trade agreements, Preferential trade arrangements,
US trade policy
Paper type Research paper
1. Introduction
Increased trade and commercial relations between the USA and Africa is a prominent
feature of the US overall policy in Africa. In that relationship,trade policy is considered as a
mutually beneficial tool to promote a stable and sustainable economic growth in sub-
Saharan Africa, which is a regionwith enormous economic potentials of interest to the USA.
It is in this context that the US Congressadopted the Trade and Development Act in 2000 to
authorize:
[...] a new trade and investment policy for sub-Saharan Africa, expand trade benefits to the
countries in the Caribbean Basin, renew the generalized system of preferences, and reauthorize
the trade adjustment assistance programs[1].
Title 1 of that Act, concerning the “extension of certain trade benefits to sub-Saharan
Africa”, is what has become to be known as the African Growth and Opportunity Act
(AGOA)[2].
Signed into law by the then US President Bill Clinton in May 2000, AGOA is a
preferential trade scheme which grants market access to the USA for the exports of a
selected group of African countries. Its main legal characteristic is that it is unilateral thus
nonreciprocal, with the preference-grantingcountry, the USA, defining the eligibility criteria
and the products concerned. Notified to the Committee on Trade and Development of the
AGOA as
stepping stone
115
Received8 March 2018
Revised30 April 2018
Accepted12 July 2018
Journalof International Trade
Lawand Policy
Vol.17 No. 3, 2018
pp. 115-131
© Emerald Publishing Limited
1477-0024
DOI 10.1108/JITLP-03-2018-0014
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1477-0024.htm
World Trade Organization (WTO) on 10 January 2001[3], AGOA qualifies in the WTO
jargon as a “preferential trade arrangement[4]”. Although it is unilateral in nature, this
instrument was never designed and intended to remain so. Indeed, evidences point to the
fact that AGOA was meant to be a building block toward the negotiations of more
comprehensive trade (and investment) agreements with African countries. This paper
intends to show how the pattern of traderelations between the USA and African countries is
gradually shiftingtoward that objective. Initially planned to expire in 2008, AGOA has since
been extended a number of times until 2025 whenit is expected to give way to the numerous
trade agreements in gestation.
In 2016, America elected a new president whose trade agenda was informed by inward
protectionism, or what he claimed to be the “unfairness”of the US trade agreements.
Although the claim that US trade agreements are not fair appearsto have been around since
the early 1990s, that is decades prior to newly elected US president’scampaign and election,
it was mainly grounded on thenecessity to ensure that non-trade values are not trumped by
economic globalization (Meyer, 2017). To be sure, this sentiment that US trade policies
needed to be readdressed was commonly shared by the main presidential election’s
contestants albeit for different reasons (Meyer, 2017, p. 3). However, the type of “fairness”
which the new US president sets out to address is one that targets trade agreements that
according to him are no longer, if at all,beneficial to the US economy and jobs and therefore
need to be renegotiated. This was to be done in a way that responds to Abraham Lincoln’s
warning that “abandonment of the protective policy by the American government [...]will
produce want and ruin among [the American]people”(Trump, 2017).
Not so long after assuming office, the newly elected president issued two executive
orders on trade[5], said in fulfillment of campaign promises. The first-order purports to
identify violationsand abuses of trade agreements to which the USA is a party, with the aim
of either correcting these abuses or terminate these agreements altogether[6]. The order is
premised on the fact that many “[USA] free trade agreements, investment agreements, and
trade relations have failed”to “enhance (...) economic growth, contribute favorably to [the
country’s] balance of trade, and strengthen the American manufacturing base”[7]. By this
action, the Trump Administration intends to negotiate new trade and investment
agreements that benefit America, and to renegotiate or terminate the existing ones that
harm the US economy[7]. The second executive order establishes an Office of Trade and
Manufacturing Policywithin the White House Office[8] with the mission to:
[...] defend and serve American workers and domestic manufacturers while advising the
President on policies to increase economic growth, decrease the trade deficit, and strengthen the
United States manufacturing and defense industrial bases[9].
America’s new strategyunmistakably targets Africa too.
The USA, the European Union (EU) and other developed countries have provided
developing countries and least developed countries (LDCs) with preferential market access
via trade policies in the form of nonreciprocal trade preference programs since the early
1970s. However, the EU, an activepreferential trade provider to African countries, is already
engaged in a process of redefining its trade relationships with Africa since 2004. In fact,
following the banana saga at the WTO[10], the EU has been negotiating Economic
Partnership Agreements (EPAs) with its African partners in a bid to preserve their
historical bond. This has also entailed a shift from preferences toward reciprocity. The US
trade relation with African countries is gradually taking the same path, perhaps as a
response to EU’s move but certainlyas a redeploymentof its own global trade agenda.
JITLP
17,3
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