Johannesburg/Nairobi
Thomson Reuters Foundation
—
A cloud of uncertainty hangs over an Africa-US trade deal set to run out by the tip of September, with African unions warning that greater than one million oblique jobs could possibly be on the road if it’s not renewed.
But some trade consultants and economists say the attainable finish of the 25-year-old African Growth and Opportunity Act (AGOA) may enable African nations to hunt probably useful deals with different companions, or enhance trade with one another.
“AGOA is the breadbasket of many people in very critical sectors,” stated Hod Anyigba, chief economist on the International Trade Union Confederation Africa (ITUC-Africa), which has 17 million members.
“(But it) is not the only way to prosperity. It was one of the ways… but there could be other, better ways of trading,” he informed the Thomson Reuters Foundation.
Last-ditch talks on the way forward for AGOA have been happening in Washington, however the destiny of the deal remains to be unclear, though Lesotho’s trade minister stated final week that the United States plans to increase it by a yr.
The Trump administration helps a one-year extension of the trade initiative, based on a White House official.
Since coming to workplace in January, the administration had not publicly said a place on AGOA, a legislation handed in 2000 by President Bill Clinton’s administration to deepen trade with sub-Saharan Africa and enhance financial improvement.
It grants duty-free entry to the US market for 1000’s of African merchandise, together with motor automobiles and elements, textiles and clothes, minerals and metals, agricultural merchandise and chemical compounds exported by eligible African nations.
But President Donald Trump’s tariff insurance policies have plunged the destiny of the AGOA into doubt. However, African governments, producers and unions have been lobbying the US administration for a last-ditch short-term extension.
“Across both houses of Congress, both parties are keen on AGOA, but it’s a new US politics where the president is very much… the key decision-maker,” stated Matthew Parks, parliamentary coordinator for the Congress of South African Trade Unions, South Africa’s largest union federation.
This uncertainty signifies that, if exporters discover new markets, they should “take the gap and run with it” to guard jobs, Parks stated.
From automotive factories in South Africa, to horticultural producers in Kenya, some 300,000 direct and 1 million oblique jobs are on the road if AGOA ends, stated Anyigba at ITUC-Africa.
Protecting these jobs is crucial to halt mass migration into nations the place migrants typically face rising xenophobia, he stated.
In Lesotho, a tiny, impoverished, landlocked nation in southern Africa, union employees stated an finish to AGOA would see a spike in intercourse work and sexual abuse in workplaces as employees are pressured into precarious conditions by exploitative employers.
“Many women feel they have no choice. Ending AGOA will give them even fewer options,” stated Solong Senohe, basic secretary of the United Textile Employees Union, which represents greater than 5,000 garment employees in Lesotho.
“AGOA means a lot to those workers, especially in a country with an unemployment rate of about 38% for youth,” he stated.
In Kenya, the textile and horticultural sectors have benefited enormously from AGOA: Kenya’s exports to the US grew from about $110 million in 2000 to roughly $570 million by 2020.
The East Africa nation has emerged as a number one exporter of textiles and attire, which represent greater than 90% of its exports beneath AGOA.
This sector has been important for Kenya’s export-processing zones, creating greater than 66,000 jobs straight, primarily benefiting ladies and younger folks.
AGOA has additionally facilitated market entry for Kenyan horticultural merchandise comparable to flowers, nuts and espresso.
“AGOA has been our competitive edge,” Pankaj Bedi, chair of the Apparels Manufacturers and Exporters on the Kenya Association of Manufacturers, wrote within the Business Daily newspaper.
“AGOA is not only a trade agreement, but a driver of jobs, stability and growth, supporting workers, cotton farmers and logistics operators. Without it, jobs will vanish and the shock will ripple far beyond export zones,” he added.
Like many different nations, Kenya is pursuing a twin technique – lobbying for renewal, but in addition looking for different trade deals in case AGOA expires.
Kenyan President William Ruto final week stated that, whereas he was looking for a five-year extension of AGOA, he additionally hoped a bilateral trade pact with the US could be signed by the tip of 2025. In April, Trump imposed a ten% tariff on Kenyan items.
If a deal is reached, it might be the primary of its form between a sub-Saharan African nation and Washington.
Another focus for African nations is the African Continental Free Trade Area settlement, which was launched in 2021 to unify all 1.4 billion folks right into a single market, however implementation has been gradual.
“(The deal) is in creche, not even at university,” stated Parks.
“That’s going to take long beyond the next three months. It’ll take five, 10 years.”
Africa additionally must look past its personal borders to buffer its companies towards AGOA uncertainty, Parks added.
“The South African agriculture sector has been working frantically, getting other markets… in the Philippines, in Thailand, China.”
Anyigba at ITUC-Africa stated any new trade deals ought to have interaction with Africa as a bloc, in the identical means the European Union engages in cross-continent trade deals.
The AGOA uncertainty may additionally push African nations to take extra benefit of world demand – particularly from China and the US – for the continent’s huge reserves of crucial minerals, wanted to energy the transition to wash power, Anyigba stated.
This is the second to make sure that “value is created on the continent,” Anyigba stated. “We (must) not become net exporters of raw materials, but also manufacturers, processing goods, so we can retain value on the continent.”
A new deal that fills the AGOA void may “make this dream possible by not taking countries apart.”