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The African Growth and Opportunity Act and the African Continental Free Trade Area

  • William Davis (a1)
Abstract

This essay assesses and evaluates the extent to which the African Growth and Opportunity Act (AGOA) increased imports from AGOA eligible countries to the United States from 2001 to 2015. The essay then examines how African countries can make the most of the preferences granted under AGOA, arguing that AGOA national utilization strategies have proven successful. In the final part, the essay explores options for future U.S.-Africa trade relations after the AGOA expires in 2025, proposing approaches that would best support African development. In this regard, this essay argues that, since Congress is unlikely to renew AGOA in its current form and since AGOA will likely be replaced with an arrangement requiring some degree of reciprocity, it will be very important for (1) the African Union's Continental Free Trade Area (CFTA) to be implemented before any new U.S.-Africa trading arrangement comes into force and (2) for negotiations for any future U.S.-Africa trading arrangement not to mimic the negotiations conducted for the Economic Partnership Agreements with the European Union.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
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1 See Figure 2 infra for recent trends in fuel prices.

3 Based on ECA calculations based on United States International Trade Commission Interactive Tariff and Trade Data Web. Cited from Simon Mevel, Session 3a: AGOA and the CFTA (Nov. 28–30, 2016).

4 Cited in Simon Mevel, Session 6: Africa's Trade Structure and Composition (Past Trends and Current) (Feb. 13 – Mar. 3, 2017).

5 For this calculation, in order to avoid data attrition and fluctuations due to the change in eligible countries, the entire list of countries that were eligible for AGOA at any point is used.

6 For this calculation, in order to avoid data attrition and fluctuations due to the change in eligible countries, the entire list of countries that were eligible for AGOA at any point is used. See UNCTADStat Database, United Nations Conference on Trade and Development and AGOA.info.

7 Cited in Mevel, supra note 1.

10 These are Burundi, Ethiopia, Kenya, Madagascar, Mauritius, and Nigeria. See Mevel, supra note 1.

11 These figures are based on the 2017 AGOA eligible list of African countries.

12 See data for all import commodities (customs value by customs value for AGOA (excluding GSP) for AGOA2017) at United States International Trade Commission Interactive Tariff and Trade Data Web.

13 Id.

14 One problem with this approach is that it might violate World Trade Organization rules forbidding subsidies. When a country decides not to collect taxes otherwise due on exports, this violates WTO antisubsidy rules. See Appellate Body Report, United States—Tax Treatment for “Foreign Sales Corporations”, WT/DS108/AB/R (Adopted Jan. 29, 2002). One way to address this impediment might be to demonstrate that forgoing such revenue would result in more revenue being raised overall, if the current tax rate were not revenue-maximizing. This argument might work particularly if the impact on tax revenues to African governments were to be taken into account, especially as it would reduce the incentive for American companies to shift profits from African companies elsewhere through transfer pricing. In such a case, revenue would not be forgone but rather effectively would be transferred from the U.S. Government to African governments.

15 Office of the U.S. Trade Representative, Beyond AGOA: Looking to the Future of U.S.-Africa Trade and Investment (Sept. 2018).

16 Donald Trump, cited in Njiraini Muchira Agoa Treaty Facing Possible Repeal in Trump Administration, East African (Jan. 23, 2017).

17 See, e.g., Africa Growth Initiative at Brookings & Econ. Comm'n for Africa, The African Growth and Opportunity Act: An Empirical Analysis of the Possibilities Post-2015 (July 2013).

18 Such a status may for example be attained when a U.S. investor sets up a subsidiary in a CFTA member country or other requirements that may be adopted in a final CFTA.

21 Id.

22 Id.

23 See, e.g., Econ. Comm'n for Africa, Policy Brief: Economic Partnership Agreements and the African Continental Free Trade Area (July 1, 2016): “Studies show that the [Economic Partnership Agreements] may have adverse affects on intra-African trade and could generate significant trade revenue losses for African countries.”

24 Econ. Comm'n for Africa, Economic Report on Africa 2015 (2015). See also Econ. Comm'n for Africa & African Union Comm'n, Update on AGOA Utilization and Recommendations for Options on the Post-2025 Trade and Investment Relationship Between Africa and the United States (Nov. 29, 2016).

Most of the work for this essay was done while the author was working with ECA's African Trade Policy Centre. This essay draws heavily on a presentation given by Simon Mevel at the first Africa Trade Week in December 2016, which was itself based on work by ECA and the African Union Commission (2016). Thanks to Simon Mevel, David Luke, and James Gathii for very helpful comments on the essay. The views expressed in this essay are the author's own, and do not necessarily reflect those of the ECA.

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  • ISSN: -
  • EISSN: 2398-7723
  • URL: /core/journals/american-journal-of-international-law
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