US measures imports and exports to Africa

US President Obama looks on

United States exports to Africa were $17.1 billion in 2010, while imports from the region were $64.3 billion, compared to $5.9 billion in exports and $23.4 billion in imports from Africa in 2000 prior to the Africa Growth and Opportunity Act, AGOA.

In a statement ahead of this year’s AGOA Forum which is scheduled to take place in Lusaka, Zambia on June 8-10, the US State Department said AGOA has made progress in creating jobs, spurring economic growth and facilitating a dialogue on key economic and political challenges facing many countries in sub-Saharan Africa.

The State Department added: “Importantly in this time of shrinking budgets, it has done all of these things at relatively low cost to the U.S. taxpayer. While AGOA has achieved a certain amount of success, it has not solved Africa’s challenges and the region has not experienced a genuine economic revolution. Africa also continues to struggle to compete in an increasingly competitive global economy.

“For these reasons I am fully committed to revitalizing AGOA. AGOA remains the centerpiece of our trade and investment policy with Africa,” Johnnie Carson, Assistant Secretary, Bureau of African Affairs Center for Strategic and International Studies in Washington DC said.

Carson noted that in 2012 the third country multi-fiber provision which allows textile producers to source their raw materials from other countries is set to expire and in 2015 the AGOA legislation itself will end

However, Carson said the State Department Africa Bureau has already outlined its vision for the next steps on AGOA which including a renewal of AGOA through 2025. The uncertainty about renewing the legislation creates a disincentive for potential investors to source production in AGOA eligible countries.

The Bureau is also set to renew the Third Country Multi-Fiber provision through 2022. The rules of origin for fabric under AGOA are one of the most important incentives to invest in textile production in AGOA eligible countries. This component of AGOA allows textile producers in AGOA countries to source their raw materials from other countries and still maintain their preferred access to the U.S. market.

Third in the outline is to add South Africa to the Third Country Multi-Fiber provision. South Africa is the only AGOA eligible country not eligible for this provision and also the country best suited to take advantage of it.

“Continue USAID’s Trade Hub and capacity building programs. Without this type of strong trade capacity building program AGOA cannot succeed; ensure that the Department of Commerce’s Foreign Commercial Service maintains their presence in Dakar and Accra. This is crucial not only for AGOA but for all of our economic initiatives in Africa,” the Bureau said.

It also proposes to increase USDA’s capacity to provide phytosanitary certification. Agriculture exports remain an important and underutilized component of AGOA; and tax incentives for earnings from AGOA investment. AGOA already provides substantial tariff savings for U.S. companies importing eligible products from Africa, but there are no other types of tax incentives provided under the legislation.

The Bureau recommend that the U.S. government support an effort to eliminate the U.S. tax on repatriated revenues from American companies that invest in factories in Africa that produce AGOA exports to the US.

“There has been a great deal of impressive economic news coming out of Africa recently. I am very encouraged by these positive developments. However, it is not the time for us to become complacent,” Johnnie Carson said.

However, he said Africa still faces huge challenges and we need to continue and revitalize our economic partnership. This is not only in the interest of our African partners, but in our interest as well.

Carson suggested that they need to maintain and improve upon AGOA today in order to continue to play a role in the growing dynamism in Africa tomorrow.

The USTR Ambassador Ron Kirk and Secretary Clinton and a number of senior U.S. Government representatives, and a strong turnout from African government, civil society and the private sector are expected.