Why AGOA Needs To Support Growth In Agricultural Exports

Why AGOA Needs To Support Growth In Agricultural Exports

Expanding opportunities in sub-Saharan Africa for agricultural exports to the U.S. will provide jobs for women and youth, and diversify U.S. trade with the region, which is currently dominated by oil and gas exports, according to a fellow at the Brookings Institute.

The main exports of agricultural products to the U.S. are cocoa paste, cocoa powder, citrus, nuts, wine, non-manufactured tobacco, fruit and vegetables.

The African Growth and Opportunity Act (AGOA), will expire Sept. 30, 2015 and congress is being pressured to reauthorize it for another 15 years to 2030. This will create needed stability to further grow U.S. trade with sub-Saharan Africa, according to Joshua Meltzer, a fellow in global economy and development at the Brookings Institution and an adjunct professor at the Johns Hopkins School for Advanced International Studies.

Particularly in agriculture, there’s room for growth, Meltzer said in a report at Brookings.edu. By 2014, agricultural exports to the U.S. increased by more than 400 percent to $261 million under AGOA, but they’re still low, accounting for less than 3 percent of total exports under AGOA.

And as a share of non-oil exports under AGOA, agriculture decreased from 6.2 percent in 2001 to 2.2 percent in 2014.

U.S. imports under AGOA, excluding crude petroleum, 2001-2013

us imports under agoa excluding crude (1)

AGOA has stimulated foreign investment in sub-Saharan Africa, often by companies in the U.S. taking advantage of access to new markets. U.S. retailers such as Target, Gap and Old Navy source goods in Africa for export to the U.S., according to Meltzer.

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AGOA is also an important tool for achieving broader U.S. goals such as building democracy and promoting market reforms — goals that are good for business. For a country to be eligible to receive AGOA’s trade preferences, it must comply with with the following conditions:

The country must make progress towards protecting worker’s rights, combat corruption, have enhanced rule of law, a market-based economy, and eliminate trade barriers.
The country can’t grossly violate human rights or engage in activities that undermine U.S. national security.

Under AGOA, the U.S. still has trade barriers on a range of agriculture goods that, if reduced, would likely lead to increased exports, Meltzer said. This includes products such as shea butter, yogurt, ghee, cashew nuts, sugar cane products, sugar-containing cocoa products, oilseeds, shrimp and prawns, bananas, and other fruit and vegetables such as mangos.

Among others, Meltzer recommends maximizing agricultural trade under AGOA by eliminating tariffs and quotas on agricultural exports from AGOA-eligible countries and allocating additional quotas for agriculture exports to AGOA-eligible countries.