61. Beyond 2025: The Future of the African Growth and Opportunity Act
- Author:
- Daniel F. Runde and Sundar R. Ramanujam
- Publication Date:
- 03-2022
- Content Type:
- Policy Brief
- Institution:
- Center for Strategic and International Studies
- Abstract:
- Over the past two decades, the United States has provided assistance and support for sub-Saharan Africa’s efforts to transform its economic and trade relationships, centered around the African Growth and Opportunity Act (AGOA). First enacted into law on May 18, 2000, AGOA was designed to significantly enhance designated sub-Saharan African countries’ market access to the United States by providing duty-free treatment for specific import categories. The legislation’s primary goal was to promote economic growth through good governance and free markets. To qualify and remain eligible for AGOA, countries were expected to demonstrate progress toward market liberalization and to improve the rule of law, human rights protections, and core labor standards. More than 20 years later, AGOA continues to provide preferential treatment to 44 countries in the region, spanning over 6,500 tariff lines. Since May 2000, AGOA has been amended four times, mostly to clarify preferential treatment terms, technical standards, and sunset deadlines. The act was initially designed to be valid for eight years, expiring at the end of September 2007. In July 2004, however, President George W. Bush signed the AGOA Acceleration Act, extending it to 2015. Toward the end of his second term, in June 2015 President Barack Obama extended its validity by signing the Trade Preferences Extension Act, under which AGOA is set to expire in 2025. The global political and economic landscape has changed profoundly since AGOA was enacted in 2000, even before the Covid-19 pandemic created new disruptions and accelerated several ongoing changes. The mobile telephony revolution has created new opportunities for millions to participate in the digital sphere, use mobile banking and payments systems, and receive commercial, educational, and medical services via the internet. Even as the sub-Saharan African region’s middle class continues to grow, it is also set to experience a youth population boom in the next three decades—which, under the right conditions, could pay a demographic dividend and avert a social crisis. Meanwhile, the United States has also entered an era of great-power competition with China. With China’s influence in sub-Saharan Africa rising significantly, this competition is also playing out through the region’s political and economic institutions. Considering these opportunities and challenges, leaders in Washington (and their constituents across the United States) ought to look at Africa as a prospect for deepening commercial partnerships, not as a continent that needs to be “saved” through foreign assistance. Accordingly, the United States can consider one of the three following scenarios in response to AGOA’s current expiration timeline
- Topic:
- Development, Economics, International Cooperation, and International Trade and Finance
- Political Geography:
- Africa