Agoa 2013: Oil 'too dominant' in trade deal with the US

Ms Mulu Solomon, the president of the Ethiopian Chamber of Commerce and Sectoral Associations and Mr Stephen Hayes, the CEO of The Corporate Council on Africa at the opening of AGOA 2013 in Addis Ababa, August 9, 2013. The forum meets annually to take stock of the preferential trade deal. ANDUALEM SISAY 

Africa’s exports to the United States market under a tax free privilege initiated in 2000 continue to be dominated by oil and raw materials-- mirroring the continent's trade with China and the rest of the world.

Statistics shows that after the enactment of the African Growth and Opportunity Act (Agoa), exports have increased by more than 500 per cent from around $8.2 billion then to $54 billion in 2011, although about 90 per cent of these are natural resources, mainly oil.

This has been a key observation during the multinational annual meeting of Agoa parties, which is underway in Addis Ababa.

"If we continue to export only raw materials under Agoa, we will not achieve one of its objectives which is export diversification," Mrs Fatima Haram Acyl, the African Union's Trade Commissioner said.

"I believe you all agree with me that exports from Africa have not flooded the US market as many hoped they would when Agoa was enacted in 2000," Mr Yaecob Yalla, Ethiopia's State Minister of Trade said at the meeting's opening.

Non-oil exports from African countries under Agoa reached $4.5 billion in 2011, a gain from $1.2 billion in 2001. An estimated 350,000 direct and 1 million indirect jobs have also been created under Agoa.

Agoa enables the 39 eligible sub-Saharan African countries to export most products duty-free to the United States.

The 2013 Agoa Forum is seeking to highlight the progress achieved since the Act’s inception in 2000 and to launch a dialogue on the future of US-sub-Saharan Africa trade and economic cooperation.

The continuity of Agoa, which would end in two years, is not clear though President Barack Obama has recently expressed the need to extend it, a stance also backed by the beneficiaries.

Exploit window

Former Ethiopian Trade and Industry Minister Girma Biru, now the country's US Ambassador, says that most African countries have not benefitted because the infrastructure and skilled labour that would have allowed them exploit the window using value-added products were absent when the law was first enacted.

He is however optimistic that as many eligible countries have been investing in these, the continent will increase its non-oil exports.

"The enhanced Agoa envisaged for the next two decades should go beyond market access by strengthening technical assistance and capacity-building initiatives to African entrepreneurs and businesses," Ethiopia Prime Minister Hailemariam Desalegn said at the opening the ministerial forum on Monday.

Michael Froman, the United States Trade Representative, and who recently toured Africa with President Obama, noted that Agoa is at the heart of America's economic relationship with sub-Saharan Africa.

"...We must do more to promote trade and investment, to create jobs and growth on both sides of the Atlantic. Africa can be the planet's next great economic success story," he said.

"Indeed, much of what President Obama did on his trip, in his meetings with leaders, businesspeople, and youth, highlighted trade and investment as key drivers for Africa's future and development. To that end, the President has announced a number of new initiatives, including Trade Africa and Power Africa.

The US is also pushing for reciprocity, in the wake of preferential trade deals that European Union is negotiating with a raft of African countries.

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