Bill Receives Minimal Attention, Creates Huge Opportunities for Businesses

Economic growth in the emerging markets of Sub-Saharan Africa….leaves Africa poised for long-term investment in infrastructure, energy, agriculture, and services.  Not only does this offer the prospect of continued economic growth in the world’s poorest region, it also creates tremendous opportunities for US investors and businesses. – Fred Oladeinde, AGOA Civil Society Organization Secretariat

Over the last few weeks, the international trade community has been abuzz about the approval of trade promotion authority for President Barack Obama. Today, we are watching the vote on the TPP in the House. However, one important piece of legislation passed but received minimal attention. That is the African Growth and Opportunities Act (AGOA), which is included in ITE’s list of top five trade policies to watch closely this year.

AGOA, which promotes trade between the United States and eligible Sub-Saharan African countries, was reauthorized toward the end of last month in the Senate under the Trade Preferences Extension Act of 2015. The bill was approved by the Senate with a 97-1 vote.

While some may raise the question as to why we should even consider Africa, the true question is: Why not? A number of African economies have seen greater GDP growth rates than the world average. Many countries have successfully implemented reform measures that make it easier to invest and trade in both traditional and non-traditional sectors.

As I hear some U.S. companies question doing business in Sub-Saharan Africa, other countries and regions are ahead of the game in this growing market. The European Union, China, India and Brazil have been reported as top investors in the region. Just two weeks ago, I was engaged in talks with Canadian investors looking toward the Sub-Saharan African region.

The potential for U.S. businesses in the Sub-Saharan African region is the reason to follow the AGOA policy.

Here are three key things to know about the recent bill reauthorizing AGOA:

1. Extension period – AGOA will be extended for another ten years until September 30, 2025.

2. Efforts to shift toward a reciprocal trade agreement – The United States has not negotiated a free trade agreement (FTA) with any Sub-Saharan African country, making it the only region without an FTA with the United States. The only African country that the United States has signed  a free trade agreement with is the North African country of Morocco. In earlier posts, I have advocated the need to shift away from the unilateral toward a reciprocal trade agreement with Sub-Saharan Africa so that it truly promotes mutually beneficial trade. In May 2015, Senators Chris Coons (D-Delaware) and Jim Inhofe (R-Oklahoma) introduced the Africa Free Trade Initiative Act. The purpose of the bill is to encourage the U.S. President to develop a plan to negotiate and implement FTAs with Sub-Saharan African countries.

3. Third party fabric provision extension period – This provision allows eligible African garment makers to export their product to the United States duty-free, provided that the textiles originate in the United States or the region.  The provision was last  renewed in 2012 until 2015. Now, the AGOA third party fabric provision will be in effect until 2025.

The AGOA legislation awaits a vote in the House. In the meantime, encourage your representatives to vote for AGOA reauthorization and support reciprocal trade with Sub-Saharan Africa. Also, take advantage of the business opportunities that exist throughout Sub-Saharan Africa.


Note: Another key issue to follow is the reauthorization of the Ex-Im Bank, which is set to expire on June 23, 2015.


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About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
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One Response to Bill Receives Minimal Attention, Creates Huge Opportunities for Businesses

  1. Taiwo Ogungbuaro says:

    A Reciprocal Free Trade Agreement with any Sub-Saharan African Country! This is the next major focus the United States should urgently look into. Considering the potential of the market of the Region and their vast resources. One could argue that the United States government should not look at the short term gain rather than the long term benefits of a bilateral trade agreement with this region. As notated that the Chinese, Europeans and Indians have vested interest in the region and mostly invested because they have seen where the next world rapid economic growth will come from in the next decades. It is welcoming development that senators Chris and Jim introduce African Free Trade Initiative Acts bill at the floor of the senate for consideration. The world knows that where there is little development but with huge potentials to grow, Capital investment in such a region will not be a bad idea.

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