What is AGOA?

AGOA is a preferential trade arrangement unilaterally granted by the US to eligible countries in what we have come to know as Sub-Saharan Africa (SSA). Enacted in 2000, AGOA allows beneficiary countries to access the US market on a duty-free basis and covers over 6,000 products. The US developed AGOA as an instrument for facilitating an economic relationship with Africa, and to date, it is the only trade arrangement that the US has with any country in SSA. Currently, there are 32 countries eligible for AGOA, and we will return to the matter of eligibility in a moment. First, I want to take a step back and situate AGOA within the larger multilateral trading system—the World Trade Organization (WTO).

A central principle of the WTO is the principle of most-favored-nation treatment. This means that countries agree to levy the same duty to all member countries of the WTO ensuring transparent and predictable trade. However, the agreement has several provisions (special and differential treatment provisions) that grant “developing” countries special rights. One of these provisions is the Enabling Clause, which provides them with a legal basis to provide nonreciprocal preferential treatment (including zero duty or lower tariffs on imports) to “developed” countries. This provision is the basis for the Generalized System of Preferences (GSP) and other nonreciprocal preferential trade arrangements including AGOA. In 1975, the US GSP, a broad-spectrum provision that offered benefits to over 100 countries across the world, came into force. This GSP offered duty-free treatment for over 3,600 products and offered additional duty-free treatment for 1,500 products from what are known as least-developed beneficiary countries (LDBCs).

Twenty-five years later, AGOA was birthed. And despite the fact that many SSA countries were eligible under the GSP, the US envisioned a new arrangement designed to foster a “more meaningful” partnership with Africa. AGOA beneficiary countries could now enjoy additional benefits over and above the US GSP, including wider product coverage for duty-free treatment and trade-related support from the US to “capacity build” countries to take advantage of AGOA. However, to benefit from this new lucrative market opportunity, SSA countries must meet the eligibility requirements. The United States Trade Representative (USTR) provides that for countries to be deemed eligible under AGOA, they “must establish or make continual progress toward establishing a market-based economy, the rule of law, political pluralism, and the right to due process. Additionally, countries must eliminate barriers to U.S. trade and investment, enact policies to reduce poverty, combat corruption, and protect human rights.”

Now we return to the matter of eligibility. Of 49 countries in SSA, only 32 countries are AGOA-eligible. While Equatorial Guinea and Seychelles are ineligible because they have developed beyond the income threshold for AGOA, other countries such as Burkina Faso, Gabon, Guinea, and Niger are ineligible because the US does not approve of their “rule of law” or political environment and leaders, so to speak. The ineligibility mechanism of AGOA draws our attention back to the precarity of the agreement. Put simply, eligibility is dependent on implementing the US’s prescribed political and economic policies. From a political economy perspective, AGOA appears to be structural adjustment programs (SAPs) rebranded and re-deployed to a new sphere—international trade. Conditionality was an integral component of the 1980s International Monetary Fund (IMF) lending program to so-called developing countries. This framework has been heavily criticized, with many studies showing the destructive impact of the SAPs. Yet, and perhaps regardless of these studies, unilateral and nonreciprocal preferential trade arrangements like AGOA continue to include conditions. Unlike trade agreements with two or more countries negotiating the terms of access into each other’s markets, unilateral trade arrangements are designed by the granting country. This means beneficiary countries rely on the good will of the granting countries successive administrations to continue accessing these markets duty free. This brings us rather neatly on to the matter of AGOA today.

AGOA today

AGOA has been renewed several times since its inception, with the last renewal occurring in 2015. It is set to expire again on September 30, 2025. In anticipation of the expiry of the act, on April 11, 2024, US Senators Chris Coons and James Risch introduced the AGOA Renewal and Improvement Act 2024. The new act proposed an extension of AGOA by another 16 years, until 2041. Interestingly, the Biden administration (which contrary to expectations, did not reverse any of the first Trump administration’s trade policies and, in some cases, doubled down on them) did not pass the bill and instead left it as a pending matter to be dealt with by the incoming administration.

Here we begin to see the effect of the huge power imbalance between this US-Africa partnership. For the US, imports from Africa account for a measly 2 percent of all imports. For the 32 SSA countries that are still eligible for AGOA, the agreement represents millions of dollars in revenue and hundreds of thousands of jobs. The chart below illustrates the economic significance of AGOA to beneficiary countries.

While a macroeconomic analysis of AGOA would show that very few African countries actually export under AGOA (chart 1), I think macroeconomics has a way of creating abstract paintings out of people’s very real experiences. AGOA utilization is low, yes, and for many reasons that are beyond the scope of this article. However, for the countries and sectors that utilize AGOA (chart 2), the export opportunity created by the duty-free access to the US market represents people’s livelihoods, businesses, education, health care, and so much more.

AGOA reauthorization has been on the agenda for African countries. However, even before Trump’s “Liberation Day” tariffs, the prospect of AGOA renewal was dim. In March, former US Ambassador to Kenya Kyle McCarter cast further doubts about the extension of AGOA stating that AGOA was not part of the administration’s agenda. He added: “AGOA is a one-sided agreement and is set to the benefit of Kenya and not the US. You can’t classify AGOA as a reciprocal trade [arrangement] and it’s been very clear from President Trump that every arrangement is going to be win-win.”

The current administration’s push for reciprocity (as defined exclusively by them) and complaints about the US not benefiting from existing trade agreements or arrangements aren’t new phenomena in US trade policy. We need to interrupt and question the narrative that these are solely Trump administration policies.

As I mentioned earlier, the Biden administration did not reverse most of Trump’s tariffs, adopting Trump’s arguments that unequal trade was in a large part to blame for the shrinking middle class and industrial base. However, since 2001, when China joined the WTO, the US policy makers have continually blamed the multilateral trading system for the decline of US economic power. While the WTO has received very valid criticism on how the design of the agreement has produced and grandfathered unequal trade relationships between the “developed” and “developing” world, this is sadly beyond the scope of this article. Instead, I want to bring to light that China’s joining the WTO is directly correlated with the US weaponization of trade.

Let me set the stage briefly: It’s the year 2000, and China is on a campaign to join the WTO. The Clinton administration, seeing an opportunity to bring China to the liberal market economy, actively supports, nay, champions China’s accession. China joins the WTO in 2001, and trade between China and the US skyrockets due to lower duties and other market-access benefits, increasing from less than $100 billion in 1999 to $558 billion in 2019. As trade between the countries increases and the Chinese economy expands at an astronomic rate, China’s trade practices start to be questioned, with many countries arguing that China is not playing by the WTO rules. The long and short of it is that the US felt that the WTO was not doing a particularly good job at reining in China, and as such, the organization’s relevance in international trade was no longer valid.

Contrary to popular media’s current narrative, the weaponization of trade did not start during Trump’s first administration; instead, we can trace its foundations back to the Bush administration and the beginning of the US-China Trade War. This trade war has come to redefine the US’s attitude to multilateralism, a concept that the nation championed in the 1940s during the establishment of the General Agreement on Tariffs and Trade (GATT)—the predecessor of the WTO. My central argument here is that the US has been on a long road to rescinding AGOA and weaponizing trade policies as an instrument to gain and maintain their economic and political power vis-à-vis China.

Sure, Trump’s “America First” protectionist and mercantilist policies may have accelerated things, but arguably, it was only going to be a matter of time before the US turned its trade-as-war policy to fashion a more ideal (for the US) relationship with Africa, where the US has substantial “national security” interests.