US’ new Agoa Bill a worthy improvement

Following the 2024 US-Sub-Saharan Africa Trade & Economic Co-operation African Growth & Opportunity Act (Agoa) Forum in Washington last week, Lethabo Sithole – a legal practitioner and managing partner at Amila Africa – says it is timely to examine the key elements of the US’ Agoa Renewal & Improvement Bill of 2024, which has been introduced in Congress and referred to the Senate’s Committee on Finance for initial consideration. Writing in Business Day, Sithole notes the new Bill extends the Agoa preference sunset clause from September 2025 to September 2041, offering a 16-year extension. ‘This will provide greater stability and predictability for trade relations between the US and Agoa-eligible countries.’ She adds at present, countries graduate from Agoa on reaching high-income status. Under the new Bill, graduation will occur only after maintaining a high-income status for five consecutive years. In addition, graduation may be delayed by up to five years if the US is negotiating a free trade agreement with the country concerned. ‘The current annual review process for Agoa eligibility will shift to a biennial review, with out-of-cycle reviews possible at any time. Congress now has the power to initiate out-of-cycle reviews through relevant committees.’

The Bill extends the favourable third-country fabric rule for ‘lesser developed countries’ by 16 years, allowing them to continue benefiting from Agoa’s textile provisions. Importantly, says Sithole, the special Agoa apparel visa system is abolished, reducing administrative burdens on importers and exporters. Verification visits by US customs will now occur on an ‘as needed’ basis, rather than annually. The legislation introduces a facility to review and potentially expand Agoa product coverage. Sithole notes while only about 3% of tariff lines remain dutiable under Agoa and most-favoured nation zero, she says this review aims to further liberalise trade. The Bill appropriates $100m through USAID for the fiscal year 2025 to assist Agoa beneficiaries in implementing their utilisation strategies. This support includes:
* Export promotion activities: funding for activities that enhance export competitiveness and market access;
* Improving customs operations: investments in customs modernisation and trade facilitation; and
* Trade capacity building: resources for training, technical assistance, and infrastructure development.

Sithole argues Agoa and the African Continental Free Trade Area can complement each other by enhancing market access, strengthening regional value chains, supporting trade policy objectives, fostering investment and promoting policy alignment. ‘By leveraging both frameworks, African countries can maximise their trade and development potential, benefiting from preferential access to the US market while also enjoying greater integration within the continental market.’