Sisule F. Musungu – The eighth African Growth and Opportunity Act -8^th AGOA Forum- takes place in Nairobi, Kenya from the 4^th to the 6^th August 2009. The theme for this year’s Forum is “Realizing the Full Potential of AGOA through Expansion of Trade and Investment”. The theme sounds depressingly similar to the themes of the last two forums. The theme of the 7^th AGOA Forum, in 2008, was “Mobilizing Private Investment for Trade and Growth” and that for the 6^th Forum, in 2007, “As Trade Grows, Africa Prospers: Optimizing the Benefits under AGOA.” The topics in the Forum Programme are also fairly familiar. The familiarity of topics and like sounding themes year in year out might not necessarily be a negative thing. But it is a reason to look beyond the surface.

The big question is what has AGOA done for Africa? Can it continue to do the same things in a changing world with major shifts being witnessed with respect to trade, finance, environment, technology, migration, security etc? Does this remain the right framework for Africa to engage the US on trade regulation and market access? Talking about potential, what is the full potential of AGOA?

Difficult to show substantial success

AGOA came into being on 18^th May 2000 when President Clinton signed into law The Trade and Development Act of 2000. In addition to AGOA, the Trade and Development Act also deals with trade benefits for the Caribbean Basin countries, renewal of Generalised System of Preferences and reauthorisation of trade adjustment assistance programmes. Three sets of AGOA relevant amendments have since been introduced to the Act all during President George W. Bush’s presidency. It is argued, on the AGOA website, that “AGOA can change the course of trade relations between Africa and the United States for the long term, while helping millions of African families find opportunities to build prosperity: By reinforcing African reform efforts; By providing improved access to U.S. technical expertise, credit, and markets; and By establishing a high-level dialogue on trade and investment.

There is no doubt that AGOA, like other similar preferential market access arrangements for Africa, have brought important trade and development benefits to the region. In the case of AGOA, however, the current numbers leave alot to be desired. Based on the statistics, Mwangi Kimenyi of the Brookings Institution, concludes in a recent piece (African Growth and Opportunity Act: A case of Vanishing Benefits) that “Although AGOA is touted as a success story, a careful evaluation reveals that the initiative’s impact has been limited.” His analysis is corroborated by the U.S. Department of Commerce’s own statistics published in U.S. – Africa Trade Profile 2009. These numbers, for example, reveal that:

• AGOA imports continue to be dominated by crude oil imports, which account for 79.5% of total imports from Sub-Saharan Africa to the U.S. In total, petroleum products account for 92.3% of AGOA imports into the U.S. As a corollary, growth in exports to the U.S from the region is most significant in oil producing countries and, hence, AGOA benefits remain concentrated in a few countries and among a few beneficiaries in these countries.
• Even beyond oil, AGOA is primarily a commodity based trade arrangement. Although the Department of Commerce report argues that U.S. imports under AGOA continue to become increasingly diversified, a careful look at the mentioned products do not evidence a diversification of African economies.

AGOA can only be seen as a success if the nature of exports from Sub-Saharan Africa under the arrangement are sufficiently diversified and the benefits are more widespread as between different countries and within countries.

Framing Africa-U.S. trade relations for the future

The world has changed significantly in the nine years that AGOA has been around. Consequently, even if the problems of Africa remain the same or similar, it is fair to argue that in a changed global environment, the solutions for Africa’s problems may be different. At the very least, we need a reappraisal of the frameworks we are using to tackle these problems. The Nairobi Forum, coming at a time of: significant uncertainty due to the global economic and financial problems; increasing urgency with respect to climate change; a major health crisis (the H1NI flu crisis); and a new U.S. administration would have provided an important opportunity for a broader critical review and assessment. As noted already, however, the programme suggests the discussion will be more of the same.

More broadly, with all the major economic, geopolitical, financial and environmental changes that have been witnessed since 2000, we need to ask the question: Should U.S. – Africa trade relations still be framed as a unilateral preferential scheme primarily aimed at increasing commodities trade?

President Obama, in his Ghana Speech on 11^th of July 2009 seemed to suggest a certain level of reframing. He argued then that: “Africans have shown capacity and commitment to create their own opportunities. But old habits must also be broken. Dependence on commodities – or single export – concentrates wealth in the hands of the few and leaves too many people vulnerable.” I reaction to the Obama speech I had blogged approvingly of this approach in a post titled “Obama’s Africa Policy – A Response to the Ghana Speech“. If the Obama administration is serious about this statement then it must reframe and more seriously rethink the nature and scope of the framework for engaging Africa on trade. Equally, it is incumbent upon African leaders, especially trade and finance ministers, need to stop and re-evaluate whether AGOA remains the best way to deal with the U.S. on trade-related matters. The deliberations and outcome of the 8^th AGOA Forum will tells us if there is any hope in this direction. If the signs are negative, probably it is time to think, outside of the AGOA box, of what the U.S. – Africa trade relations should be.