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Time to renew and enhance the African Growth and Opportunity Act

Published on February 27, 2015

What the U.S. Should Do

Instead of simply renewing AGOA, the U.S. should update and enhance it to encourage African economic integration and set the stage for eventual free trade between the U.S. and Africa. Specifically, the U.S. should:

  • Renew AGOA through at least 2025. Failure to renew AGOA on a long-term basis risks discouraging investment and long-term trade contracts and undermining America’s credibility as a reliable economic partner in the region.
  • Reauthorize the Generalized System of Preferences. On July 31, 2013, the Generalized System of Preferences, the U.S. trade program designed to promote trade in developing countries, expired without renewal for the eighth time in its 30-year history. Given the critical linkage between AGOA and the GSP and the substantial trade benefits arising from the arrangement, Congress should renew the GSP. Furthermore, Congress and the Administration should seize this unique opportunity to reform the program. Reform can reorient the GSP toward better assisting developing nations while simultaneously bringing preferences in line with the realities of global trade.
  • Revise rules of origin to levels corresponding with other trade agreements. In the 2013 World Trade Organization (WTO) Bali Agreement on trade facilitation, U.S. negotiators made a commitment to make the rules of origin for least-developed countries “transparent and simple…contribut[ing] to facilitating market access.” Encouragingly, the U.S. recently took the final step to implement the WTO Trade Facilitation Agreement. However, further lowering rules of origin to levels equal to other free trade agreements would encourage global production integration for GSP imports.
  • Incentivize AGOA-eligible countries to pursue greater economic freedom. Congress should consider revising the AGOA eligibility requirements to include explicit entrepreneurial environment criteria, particularly in the policy areas of regulatory efficiency and open markets, which are addressed in the annual Index of Economic Freedom, a data-driven cross-country analysis.
  • Facilitate greater private-sector-to-private-sector engagement. Thriving private sectors are the best source of inclusive and broad-based economic growth because they aggressively seek out opportunities for trade, investment, and partnership. The U.S. should leverage its existing network of Trade and Investment Framework Agreements (TIFAs) to address private-sector issues. With the launch of the three regional Trade and Investment Hubs and an expanded Commerce Department presence, the TIFAs could be useful vehicles for bringing U.S. and African officials together to advance U.S. commercial interests on the continent. Read more. Source | The Heritage Foundation