2011 AGOA Forum: Assessing the impact of AGOA

Posted: 2011-May-11

The 2011 AGOA Forum will be held in Lusaka, Zambia, on June 9th and 10th. This year's event marks the 10th anniversary of the AGOA Forum and is an opportune time to reflect on the impact that AGOA (the African Growth and Opportunity Act) has had over the past decade.

AGOA was launched in 2000 as the U.S's flagship Africa trade initiative, offering duty-free access for over 7,000 products from eligible African countries to the U.S. market. At face value, AGOA seems to offer extreme advantages to African exporters, and much noise has been made about its intent. What then has AGOA actually achieved over this period?

DNA Economics set out to answer this question through a "systematic review" of all papers, analysis and studies done on AGOA since 2000. For more on the approach and our detailed results, download the report here. The key finding from this review is that AGOA has had a phenomenal impact on apparel exports from a small number of Sub-Saharan African countries, primarily Lesotho. Outside of apparel we found little or no evidence of AGOA induced exports in any other sector.

The main reason for this muted impact is that AGOA provides for very little in the way of additional market access, over and above what African exporters already enjoyed under the GSP (Generalised System of Preferences). For example, almost all agricultural exports from Africa received duty-free treatment in the US under the GSP, with AGOA extending preferences to just 26 additional agricultural product lines.

However, for many products excluded from AGOA, tariffs remain relatively high. The average duty on excluded agricultural products exceeds 30%, while for the over 900 manufactured product lines excluded from AGOA, the average duty is around 9 percent.

The review suggests that the broader economic impact of AGOA could be improved by extending preference to all products, and especially agricultural goods where African countries have export interests. AGOA preferences should also be made permanent - this would provide greater certainty to potential investors. Finally, these measures should be supported by non-restrictive rules of origin, enabling African exporters to source inputs freely from anywhere in the world and exploit their comparative advantage in labour intensive products.