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Monday, 29 July 2013 10:20

Africa: Forthcoming - Hard Evidence Shows Africa Stands to Benefit in a Renewed Trade Relationship With the U.S.


ADDIS ABABA, Ethiopia, July 29, 2013 (UN-ECA) - September 30 2015 is the expiration date for the African Growth and Opportunity Act (AGOA) bringing to an end, the defining characteristics of the trade and commercial relationship between the United States and Africa.

Amidst the discussions by African and U.S. policymakers on the post-2015 commercial relationship between the United States and African countries (excluding North Africa), hard empirical evidence has been the missing ingredient in the ongoing, legislation oriented debates.

In order to inform the design of the post-2015 relationship, the Economic Commission for Africa and the African Growth Initiative (AGI) at Brookings Institution has published "The African Growth and Opportunity Act; An Empirical analysis of the Possibilities Post-2015" - an empirically based analysis of how changes to the legislation could affect trade patterns as well as how changes in the global trading environment could affect U.S.-Africa trade volumes and African economies more broadly.

The publication sheds light on the trade and income implications of i) not extending AGOA beyond 2015; ii) expanded product eligibility for AGOA; iii) revisions to the currently eligible countries; iv) a restructuring of AGOA to resemble the economic partnership agreements (EPAs) of the European Union; and v) the effects that a possible EU-U.S. free trade agreement (FTA) could have on AGOA or an EPA-like situation, with an additional scenario examining how a continental free trade area (CFTA) would play into such an integrated trade environment.

The findings point to a strong case for continuing or expanding the current AGOA preferences beyond 2015. The report finds that without an extension, there will be declines in African exports, economic diversification and employment for many AGOA-eligible countries.

Further, the results show in a projected scenario that a return to the U.S Generalized System of Preferences (GSP) would mean that the extra 1,800 product lines for which AGOA provides preferential access would no longer be duty free according to the report.

The GSP would be the only preferential scheme offered by the U.S. to Africa, which is also granted to 127 other developing countries in the world.

The results also show the importance for regional integration of allowing African exporters to remain competitive, and making efforts toward offsetting the potential tariff revenue losses that could be experienced with EPAs (or similar agreements), or external FTAs that would compete with African exports. Increased trade assistance and investment will likely be necessary for countries to ensure sufficient progress in this area.

About AGOA: The African Growth and Opportunity Act (AGOA) was signed into law in 2000, marking the beginning of a new trade-focused relationship between the United States and Africa. AGOA provides trade preferences for the continent that, combined with the U.S. Generalized System of Preferences (GSP), allow for duty-free export access to the U.S. market for up to 6,400 product Lines coming from 39 countries in Africa.

Issued by: ECA External Communications and Media Relations Section

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