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Yesterday, Congressman Donald M. Payne, Chairman of the Subcommittee on Africa and Global Health, held a hearing entitled, “Beyond Oil and Gas: African Growth and Opportunity Act’s Benefit to Africa.” Payne, an original supporter of the African Growth and Opportunity Act (AGOA), called the hearing to critically analyze the legislation’s impact on growth and poverty reduction in Africa since the enactment of the bill in May 2000.
The African Growth and Opportunity Act, a trade preference program for Sub-Saharan Africa, provides duty-free access to the US market for certain goods from select Sub-Saharan African beneficiary countries. Currently, thirty-eight Sub-Saharan countries are AGOA eligible.
Although AGOA has created thousands of jobs and millions of dollars in investment for these countries in a few sectors, Payne however questioned whether AGOA has delivered on its promise of not only opening markets but also promoting economic growth and development in Sub-Saharan Africa. Oil accounts for nearly 82% of US imports, of which over 70% comes from only a handful of countries. “Given that oil and gas are already major commodities for the US’ ever-increasing economy, I am concerned about its inclusion in AGOA,” Payne commented. “Oil products already receive low tariffs whereas apparel items face higher tariffs, ranging from 35 - 90% depending on the item.”
According to many experts, agriculture is a major conduit for African economic growth and development. Yet, AGOA benefits to that sector have been miniscule. Furthermore, the volatility of the apparel industry has left many eligible Sub-Saharan countries out of that global market. With the expiration of the apparel quotas occurring, China and India are beginning to flood the global market with their cheaper wares. Payne stated, “When AGOA was initially crafted, there was a great debate as to whether it would be a tool for real, broad, sustained growth and poverty reduction for all of Africa. I must say seven years later, AGOA has not lived up to that promise. We must ensure that capacity is being built in the necessary industries that will move Africa towards greater sustainable poverty reduction and development.”
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