Bush signs Agoa Act into law

Jul 21, 2004
Author: P&S

The Africa Growth and Opportunity Act (AGOA), which was signed into law on 13 July by President George W Bush, has come as a fillip to a number of African states that were anxious about whether the benefits of the export/import programme would be extended through to 2015.

In June the Bill passed its first hurdle when the US House of Representatives unanimously approved its extension.

“By reducing barriers to trade, this law has increased exports, created jobs and expanded opportunity for Africans and Americans alike,” said Bush. He said AGOA is giving Americans greater confidence to invest in Africa while encouraging African nations to reform their economies and governments to take advantage of the opportunities that AGOA provides.

“There’s a growing consensus in both Africa and the United States that open trade and international investment are the surest and fastest ways for Africa to make progress. For too many years the world’s efforts to promote African development were focussed on aid.”

One of the Act’s provisions allows less-developed sub-Saharan African countries to use third-country fabrics in the manufacture of apparel for export to the United States. Since its enactment in 2000 AGOA has generated over USD300 million in investment and created thousands of jobs in some of the least developed African countries.

Two-way trade between the US and sub-Saharan Africa grew 36 percent in 2003 to just below USD33Bn. US imports from sub-Saharan Africa totalled USD25.6Bn and exports from the US were USD7Bn.

Most of the gains in imports into the USA are a result of AGOA.

African countries are beginning to take concrete steps towards integrating their economies – building regional communities, adopting common currencies and increasing trade with each other – and laying the groundwork for the establishment of an African Economic Community which, like the European Union, could enable them to benefit from larger markets.

That’s the findings of a report issued by the United Nations Economic Commission for Africa (ECA), which was released in New York at about the same time that President Bush was signing the extension to the AGOA Act.

“Africa’s longstanding recognition of the needs and benefits or regional integration has spawned the proliferation of regional economies and protocols across the continent, but these have to yet to be strategically consolidated,” said ECA executive secretary general KY Amoako and African Union chairman Oumar Konaré, who jointly wrote the report’s preface.

Analysts believe that forming a regional trading block is Africa’s best chance for promoting sustainable development and becoming a viable trading partner in the global economy.

The continent currently has 14 regional economic communities – considered the building blocks of the African Economic Community. An additional number of bodies like the West African Monetary Institute and the Development Bank of Southern Africa’s Preferential Trade Area have been created to support the process.

However, despite the many protocols linking national and regional transportation, telecommunications, capital and labour mobility, regionalisation has never been given the financial and human resources to succeed while trade among the continent’s countries remains low, the ECA report concludes.

It says the ambitions outlined by African political leaders in the mandate of the regional economic commissions have never been matched by their capacity to deliver.

In some cases the protocols are contradictory and the report recommends the African Union play a role in rationalising these legal instruments and aligning them to continental objectives. Operational funds could be raised by such self-financing mechanisms as community levies and special airport taxes. It says more resources are needed for the African trunk road network and an African railroad network.

The New Partnership for African Development (NEPAD) should be the driving force for these initiatives, the report recommends.

“To be effective, integration must be part of an overall development strategy. Our longstanding commitments to cooperation across borders compel us, and the needs and aspirations of our people compel us.”

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