November 4, 2023

U.S. businesses want certainty over the future of Washington’s flagship trade programme for Africa as they reduce their dependence on China and consider investing on the continent, a Biden administration official said on Saturday.

In the wake of the global pandemic and the supply chain headaches it provoked, companies across a range of industries are moving operations out of manufacturing powerhouse China in an effort to de-risk their businesses and foster resilience.

The once-in-a-generation shift comes as the African Growth and Opportunity Act (AGOA), a programme that grants exports from qualifying African nations duty free access to the U.S. market, is set to expire in 2025.

U.S. officials were in Johannesburg, South Africa on Saturday wrapping up three days of talks with African trade ministers over AGOA’s future.

“American businesses want AGOA reauthorised. Regardless of sector, they’ve made that very clear,” British Robinson, who heads the U.S. administration’s Prosper Africa initiative, told Reuters on the sidelines of the meetings.

Prosper Africa was established in 2019 to strengthen U.S.-Africa economic ties and deepen two-way trade and investment.

While U.S. companies are increasingly looking to Africa as an alternative investment destination as they move away from China, Robinson said they need the reassurance of an extension of AGOA.

“(It’s) extremely important. That’s what they’ve told us,” she said, adding that the programme’s future was ultimately in the hands of the U.S. Congress. “We don’t have control over that.”

Over $10 billion worth of African exports entered the United States duty free last year under the programme. African countries are pushing for Congress to pass an early 10-year extension of AGOA without changes in order to reassure businesses and investors.

The initiative, initially launched in 2000, has enjoyed longstanding bipartisan support from U.S. lawmakers, who view it as critical to countering Chinese influence in Africa.

But there are divisions in Washington over whether AGOA requires updating and how best to amend it.

U.S. Secretary of State Antony Blinken said on Friday that the White House wants to work with Congress to improve AGOA and not simply renew it without changes.

U.S. House of Representatives Foreign Affairs Committee Ranking Member Gregory W. Meeks, a New York Democrat, and Chairman Michael McCaul, a Texas Republican, on Friday said they also supported improving AGOA.

“But we believe the principal consideration must be ensuring a successful and timely reauthorisation,” they said in a statement.

African governments and U.S. industry associations worry that attempts to radically alter AGOA risk bogging the programme’s renewal down in a Congress that is already struggling to pass even the most critical legislation.

Namibian Trade Minister Lucia Ipumbu said African governments had communicated a unified position on AGOA, and she was confident of its reauthorisation.

“We should not worry about what is happening in other people’s houses as long as we put our house in order,” she said.

REUTERS