US to Remove Uganda, Gabon, Niger and the Central African Republic from AGOA Trade Program

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n a significant move, U.S. President Joe Biden announced plans to remove Uganda, Gabon, Niger, and the Central African Republic from the African Growth and Opportunity Act (AGOA) trade program, effective from January 1, 2024.

The decision came in light of what President Biden described as “gross violations” of internationally recognized human rights standards by some of the nations, specifically pointing to the controversial anti-homosexuality law enacted in Uganda.

The decision does not mark a permanent exit for these countries. President Biden clarified that there will be ongoing evaluations to determine if they can re-qualify for the program based on the established eligibility criteria.

Gabon and Niger have been cited for their failure to establish or continually progress towards the protection of political pluralism and the rule of law. Despite intensive dialogues and engagements, the U.S. feels that these countries have not addressed key concerns regarding their non-compliance with the AGOA eligibility criteria.

AGOA, established in 2000, offers qualifying African countries duty-free access to the U.S. market for over 1,800 products. Its goal has been to foster economic relations, promote exports, and facilitate job creation among the participating nations. With AGOA set to expire in September 2025, there have been ongoing discussions regarding its extension and future framework.

Economic implications

The decision to remove these nations from the AGOA framework is expected to have economic implications, as the program has been a significant driver for exports and economic growth in the beneficiary countries. The four nations have not yet officially responded to the U.S. government’s announcement.

Many African governments and industrial organizations are advocating for an early extension of the program for an additional decade. They believe that confirming the continuation of AGOA without alterations will provide much-needed assurance to businesses and potential investors, ensuring sustained economic collaboration and growth.

The push for a 10-year extension underscores the significance of AGOA in Africa’s trade ecosystem. It remains to be seen how the U.S. will respond to this appeal, but the ongoing discussions indicate a strong desire to maintain and possibly expand the trade relationship between the U.S. and Africa.

Not all countries benefited the same from AGOA

Variability in the utilization of the African Growth and Opportunity Act (AGOA) among nations can be attributed to multiple factors, ranging from business climates to policy implementation challenges. AGOA’s export criteria or if the program’s objectives are unclear. Policy conflicts arise when internal stakeholders, from the government to workers, have differing views on AGOA’s vision or strategy.

By 2022, of the 39 beneficiary countries of AGOA, 18 had established a strategy to maximize the program’s benefits. Countries with a structured AGOA plan, such as Mali, Mozambique, and Zambia, saw significant growth in exports to the U.S. However, the positive correlation between having an AGOA strategy and witnessing beneficial outcomes is intricate.

While having supportive elements like political will and resources plays a role, a clear AGOA strategy can also enhance these factors and provide a straightforward path to increase exports.

For instance, Ethiopia, prior to U.S. sanctions, bolstered its AGOA-aligned exports by identifying sector-specific challenges and creating targeted solutions, leading to a significant increase in exports. Similarly, Botswana’s evolving AGOA strategy, which is continuously refined based on stakeholder feedback, may offer a valuable template for other African nations.

Sources: Reuters, TRT World and Brookings